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Iittp://www.arcliive.org/details/businesslawcasem01commiala 


Business  Law— Case  Method 


SEVEN  VOLUMES 


Prepared  under  the  Editorial  Supervision  of 

WILLIAM  KIXMILLER,  Ph.B.,  J.D. 

and 

WILLIAM  H.  SPENCER,  Ph.B.,  J.D. 
27S/S' 


A  Systematic  Non-Technical  Treatment  of 

Business  Law  in  Story  and 
Case  Form 


PUBLISHED  BY 

Commerce  Clearing  House 

1170  Peoples  Gas  Building 
CHICAGO 


T 
1915 


Copyright  1915 

by 

WILLIAM  KixMILLER 


Entered  at  Stationers  Hall,  London 
All  Rights  Reserved 


Business  Law— Case  Method 


AUTHORS 

William  KixMiller,  Ph.  B.,  J.  D.  (The  University  of  Chicago) 

William  H.  Spencer,  S.  B.,  J.  D.,  The  UNIVERSITY  OF  Chicago 
Eugene  Tincher,  Ph.  B.,  J.  D.  -  (Leland  Stanford  Jr.  University) 
Paul  N.  Dale,  A.  B.,  LL.  B.  -  -  -  -  (Harvard  University) 
Matthew  L.  Thurston,  A.  B.  -  -  -  -  (Cornell  University) 
Arnold  Baar,  Ph.  B.,  J.  D.  -  -  (The  University  of  Chicago) 
Howard  Ellis,   Ph.  B.  -      _      _  (The  University  of  Chicago) 

Royal  K.  Thomas,  A.  B.        -----    (Kenyon  College) 


Business  Law— Case  Method 


STORY  FORM 


RULING  COURT  CASES 


Volume  1.     Contracts. 

Volume  2.     Persons. 

Domestic  Relations. 
Agency. 

Volume  3.     Partnerships. 
Corporations. 

Volume  4.     Bills,  Notes  and  Checks. 

Banks,  Banking  and  Trust 
Companies. 

Volume  5.     Sales. 

Suretyship. 
Insurance. 
Real  Property. 

Volume  6.     Common  Carriers. 
Bailments. 

Interstate  Commerce. 
Index. 


Business  Law— Case  Method 


Volume  7— (a)  BUSINESS  LEGAL  FORMS: 

Contracts,  Bonds,  Deeds,  Mortgages. 
Trust  Agreements,  Corporations, 

Charters. 
By-Laws,  Minutes,  Partnerships. 
Acknowledgements,  Affidavits. 


(b)  FEDERAL  BUSINESS  LAWS: 

Federal  Trade  Commission  Act. 

War  Revenue  Act. 

Clayton  Anti -Trust  Act. 

Income  Tax  Act. 

Federal  Reserve  Bank  Act. 


(c)  WORKMEN'S  COMPENSA- 
TION ACT: 

Index. 


Foreword 

The  CASE  METHOD  of  teaching  law  was  intro- 
duced at  Harvard  University  by  Professor  Langdell, 
and  is  often  known  as  ''The  Harvard  Case  System." 
Professor  Langdell  collected  ruling  court  cases  on 
"Contracts."  These  were  compiled  in  a  large  book 
and  given  to  students  to  read.  This  innovation  in 
the  method  of  legal  education  was  at  first  skeptically 
received,  but  that  it  has  proved  a  marked  success  is 
well  known  to  all  those  who  are  familiar  with  the 
history  of  Harvard  Law  School,  and  is  attested  deci- 
sively by  its  adoption  in  the  leading  universities  of  the 
country.  Now  there  are  books  of  ruling  court  cases 
on  every  branch  of  the  law,  edited  for  the  use  of  uni- 
versity law  school  students,  and  the  advantage  of  the 
CASE  METHOD  over  the  text  plan  is  not  a  subject 
for  argument. 

Business  Law-Case  Method  enables  other  than  uni- 
versity law  school  students  to  know  principles  of  bus- 
iness law.  To  every  man  it  gives  access  to  knowledge 
on  vital  subjects  pertaining  to  his  business  and  life. 
Seven  books  teeming  with  life  stories,  business  ven- 
tures and  their  legal  consequences  are  open  for 
reading — interesting  and  of  inestimable  value  in 
dollars  and  self-satisfaction. 


CONTENTS 


I.  THE  GENERAL  NATURE  OF  A  CONTRACT 

1.  THE  ESSENTIALS  OF  A  CONTRACT         ...  1 

A.  There  Must  Be   Two   Parties         ....  1 

B.  There  Must  Be  Mutual  Assent  of  the  Parties  3 
0.    There  Must  Be  a  Distinct,  Common  Understanding    .  6 

D.  There    Must    Be    a    Proposal    Which    Results    in    a 
Promise  or  an  Act  When  Accepted         ...  9 

E.  There  Must  Be  an  Active  Intention  to  Accept  the 
Proposal 11 

2.  OONTEACT     CLASSIFIED 15 

A.  Contract  May  Be  Under  Seal  or  May  Be  Simple       .  15 

(1)  Sealed    Contracts 15 

(2)  Simple    Contracts 17 

B.  Contracts  May  Be  Express  or  Implied        ...  19 

(1)  Express  Contracts           ......  10 

(2)  Implied  Contracts 22 

O.    Contracts  May  Be  Executed  or  Executory        .         .  27 

(1)  Contracts  Executed  in  Part           ....  27 

(2)  Executory   Contracts      ......  SO 

D.    Contracts  May  Be  Unilateral  or  Bi-lateral        .         .  32 

(1)  Unilateral  Contracts 82 

(2)  Bl-lateral  Contracts 36 

II.  THE  FORMATION  OF  A  CONTRACT 

1.     THE  REQUISITES  OF  FORM 37 

A.  Oral  Contracts  Are  Generally  Enforcible         .         .  37 

B.  Contracts  May  Be  in  Writing         ....  40 

(1)  A  Written  Contract  May  Be  Stipulated         .  40 

(2)  No  Particular  Form  Is  Necessary          ...  42 

(3)  An   Agreement   May   Be    Partly   in   Writing   and 
Partly   Oral 44 

(4)  A  Written  Contract  Need  Not  Be  Signed         .         .  47 

(5)  Agreement  Signed  by  One  Party  and  Acted  On  by 

the    Other   Is   a   Binding   Contract                  .         .  49 
0.    Contracts   Required    to   Be   In   Writing   Under   the 

Statute    of    Frauds          ......  02 


II  CONTENTS— ConfmueJ 

(1)  Contracts  Within  One  Division  of  the  Statute 

(2)  Contracts  Within  the  Other  Division  of  the  Statute 
of  Frauds     

(3)  The  Statute  Requires  the  Writing  to  Be  Signed  hy 
the  Party  Under  the  Obligation 

(4)  Failure  to  Comply  with  the  Statute  Makes  the  Con 
tract   TJnenforcihle    in    Court 

D.    Contracts  May  Be  Under  Seal 

(1)  The    Seal   Makes   It   Binding 

(2)  No  Particular  Device  Is  Necessary  for  a  Seal 

2.  PAETIES  TO  A  CONTRACT         .  '       .  .  . 
A.    There  Must  Be  Two  or  More  Competent  Parties 

3.  MUTUAL  AGREEMENT 

A.     There  Must  Be  an  Offer         .... 

(1)  Negotiations  Do  Not  Constitute  an  Offer 

(2)  The  Offer  Must  Be  Communicated  to  the  Offeree 

(3)  An  Offer  May  Be  Made  to  the  PubUc 

(4)  An  Offer  by  Telegram  or  Letter  Is  Complete  When 
the  Message  Is  Received         .... 

(5)  An  Offer  May  Be  One  of  Four  Kinds 

a.  An  Offer  of  an  Act  for  a  Promise 

b.  An  Offer  of  a  Promise  for  an  Act 

c.  An  Offer  of  a  Promise  for  a  Promise 

d.  An  Offer  of  a  Promise  Conditional  Only  on  Mere  As 
sent  of  Other  Party  Must  Be  Under  Seal 

(6)  An    Offer    Must    Be    Certain 

(7)  The  Terms  of  the  Offer  May  Not  All  Be  Communi 
cated 

a.    Unexpressed   Terms 

"b.    Usages  and  Customs  of  Trade 

c    Terms  on  a  Document  Unread  but  Known  to  Be  There 

by  the  Other  Party 

<L    Terms  on  the  Document  Unknown  to  Be  There  by 

the  Other  Party 

e.  Terms  Not  Readily  Discernible 

f.  Terms  Issued  in   a   General  Notice 

g.  Terms  Stipulated  After  the  Agreement  Is  Made 


(8)     An  Agreement  to  Hold  an  Offer  Open  Is  an  Option    111 


(9)     An  Offer  Terminates     . 
a.    By  Merger  Into  Contract 


62 

65 

68 

61 
63 
63 
66 

68 
68 

71 
71 
71 

74 
77 

79 
82 
82 
83 
85 

87 
90 

92 
92 
95 

98 

101 
103 

105 
108 


113 
113 


CONTENTS— C<?«//««^^  III 

Ik    By  Expiration  of  the  Time  Designated      .         .         .  116 
e.    If    No    Time    Is  Designated,    an    Offer    Terminates 

Within  a  Seasonable  Time 118 

d.  By  Death 120 

e.  By  Conditional  Acceptance 122 

f.  By  Revocation 125 

B.    There  Must  Be  an  Acceptance         ....  127 

<1)     Acceptance  Changes  the  Offer  Into  a  Contract         .  127 

(2)  When  Offer  Specifies  the  Time,  an  Acceptance  After 
That  Time  Is  of  No  Effect 129 

(3)  When  No  Time  for  Acceptance  Is  Made,  a  Season- 
ahle  Time  to  Accept  Is  Implied       ....  131 

(4)  Acceptance  Must  Be  an  Overt  Act         .         .         .  134 

a.  Acceptance  Must  Be  Communicated         .         .         .  134 

b.  If  Acceptance  Is  Made  in  Manner  Required,  It  Is  Not 
Material  if  It  Is  Never  Received      ....  137 

c    Acceptance   hy   Post   or   Telegraph   Complete   When 

Posted    or    Telegraphed          .....  140 

d.    An  Offer  May  Require  Actual  Receipt  of  Acceptance  142 

(5)  Silence  Alone  Is  Not  an  Acceptance         .         .         .  146 

(6)  Acceptance  Must  Be  hy  the  Person  to  Whom  the 
Offer  Is  Made 148 

(7)  A  Qeneral  Offer  May  Be  Restricted  in  Acceptance  150 

(8)  Acceptance  May  Be  One  of  Two  Kinds         .         .  162 

a.  Acceptance  May  Be  hy  a  Promise         .         .         .  162 

b.  An  Acceptance  May  Be  an  Act         ....  156 

(9)  The  Power,  But  Not  the  Right,  to  Withdraw  an 
Offer,  Exists  After  Acceptance        ....  157 

0.    There  Must  Be  Contractual  Intention        .         .         .  160 

(1)  The  Parties  Must  Intend  to  Bind  Each  Other  in  a 
Legal  Manner 160 

(2)  Relationship  or  Membership  in  a  Family  Indicates 
Lack  of  Contractual  Intention        ....  163 

(5)  An  Offer  Made  in  Jest  Cannot  Be  Accepted  in  a 
Legal    Sense 166 

(4)     A  Proposal  Made  Without  Intention  to  Contract 

Cannot  Be  Accepted  in  a  Legal  Sense      .         .         .  167 

(6)  A  Proposal  Made  Without  a  Contractual  Intention 
May  Be  Accepted,  in  Case  the  Other  Reasonably  Be- 
lieves That  It  Is  Made  in  Earnest        .         .         .  170 

(6)     An  Invitation  to  Bid  Cannot  Be  Tamed  Into   a 

Promise    by    an    Acceptance         ....  171  ' 


IV  CONTENTS— C<?«//««^^ 

(7)     Bailroad  Time  TaMes  Are  Sul)ject  to  Acceptance      .  175 

4.     CONSIDERATION    IN    A    CONTRACT  .  .  .178 

A.  Consideration  Is  the  Moving  Porce  of  a  Contract        .  178 

B.  Every  Contract,  Not  Under  Seal,  Requires  a  Con- 
sideration          .  180 

O.    The  Adequacy  of  the  Consideration  Is  Not  Material  IBS 

D.     Consideration  Need  Not  Be  in  Money  or  Money  Value  186 

£.    Consideration  May  Take  One  of  the  Pollowlng  Porms:  190 

(1)  In  a  Bl-lateral  Contract  It  Is  a  Promise  for  a  Promise  190 

(2)  In  Unilateral  Contracts,  It  Is  the  Act  of  One  Party 

for  the  Promltje   of  Another         ....  192 

F.  There  May  Be  a  Good  Consideration        .         .         .  195 

(1)  In   a   Compromise          .         .         .         .         .         .  195 

(2)  In   a  Composition  With   Creditors          .         .         .  197 

(3)  In  the  Porce  of  a  Previous  Request         .         .         .  199 

G.  There  Is  No  Consideration 201 

(1)  In  the  Promise  to  Perform  What  One  Is  Bound  to  Do  201 

(2)  Where  There  Is  Impossibility  of  Performance         ,  204 

(3)  When  the  Undertaking  Is  Gratuitous       .         .         .  206 

(4)  Where  the  Act  Has  Been  Previously  Performed  On 
One  Side 208 

(6)     In   a   Moral   Obligation 211 

(6)  In  a  Promise  That  Is  Too  Vague         .         .         .  213 

(7)  In  a  Promise  to  Discharge  the  Balance  of  a  Debt  On 
Payment    of   Part 214 

H.    An  Obligation  Unenforclble  by  Some  Rule  of  Law 

Will  Be  Revived  by  a  New  Promise        .         .         .  217 

III.    CONSENT  OF  EITHER  PARTY  MUST  BE 
REAL 

1.     THERE    MAY   BE    LACK    OF    CONSENT    BECAUSE 

OF     MISTAKES 219 

A.  Mistake  as  to  the  Nature  of  the  Contract        .         .  219 

B.  Mistake  as  to  the  Person  With  Whom  the  Contract 

Is  Made 222 

O.    Mistake   as   to   Thing   About   Which   the   Contract 

Is   Made 224 

(1)  As  to  Its  Existence 224 

(2)  Mistake  as  to  Its  Identity 226 

(3)  Mistake    as    to    QuaUty 229 


CONTEN  TS—  Continued  V 

2.  THERE  MAY  BE  LACK  OF  CONSENT  BECAUSE  OF 
MISREPRESENTATION 231 

A.  Misrepresentation  Does  Not  Affect  Reality  of  Con- 
sent   at    Law  .......     231 

B.  Misrepresentation  in  Land  Contracts         .         .         .     234 

C.  When  Made  by  One  Who  Stands  in  a  Confidential 
Relation 238 

D.  When  Made  Carelessly,   Misrepresentations   Amount 

to  Fraud 241 

3.  THERE  MAY  BE  LACK  OF  CONSIDERATION  BE- 
CAUSE OF  FRAUD 244 

A.  There  Are  Five  Characteristics  Essential  to  Fraud      .     244 

(1)  There  Must  Be  a  Misrepresentation  of  Fact      .         .     244 

(2)  There  Must  Be  a  Knowledge  of  the  Falsity  of  the 
Wrong-doer     ........     246 

(3)  There  Must  Be  Intention  to  Have  the  Party  Rely 

on  the  Untruth 249 

(4)  There  Must  Be  Actual  Reliance  On  the  Untruth         .  251 

(5)  There  Must  Be  Loss  Suffered  From  the  Deception  254 

B.  Fraud  Gives  the  Injured  Party  Right  to  Avoid  the 
Contract  ........  257 

4.  THERE  MAY  BE  LACK  OF  CONSENT  BECAUSE 

OF  DURESS 258 

5.  THERE  MAY  BE  LACK  OF  CONSENT  BECAUSE 

OF  UNDUE  INFLUENCE .261 

IV.    THE  OBJECT  OF  THE  COKTRACT  MUST 
BE  LEGAL 

1.  CONTRACTS  MAY  BE  MADE  ILLEQAL  BY  STATUTE  265 

2.  CONTRACT  MAY  BE  ILLEGAL  BECAUSE  OF  THE 
COMMON   LAW 267 

A.  Contrary  to  Public  Policy 267 

B.  Contrary  to  Rules  of  Common  Law         .         .         .     269 

3.  EFFECT  OF  ILLEQALITY  OF  THE  CONTRACT         .     272 

A.  When  the  Contract  Is  Severable       ....     272 

B.  Wten  the  Contract  Is  &  Unity         .         .         .         .274 
0.    The  Court's  Action  On  an  Illegal  Contract        .         .     276 


VI  CONTENTS— Co«//>?«^// 

V.    CONTRACTS  MAY  BE  DISCHARGED 

1.  BY  AGEEEMENT 279 

A.  Waiver 279 

B.  Sulistitated     Agreement           .....  282 
O.    By  a  Provision  in  the  Contract         ....  285 

2.  BY    PEBFORMANCE 287 

A.  Payment 287 

B.  Tender              ........  290 

O.    Substantial    Performance 293 

8.     BY  BEEACH 296 

A.  Bennnciation  Before  Time  for  Performance        .         .  296 

B.  Bennnciation  in  the  Course  of  Performance        .         .  299 

4.     BY    IMPOSSIBILITY 301 


CONTRACTS 

1  THE  GENERAL  NATURE  OF  A  CONTRACT 

1.    The  Essentials  of  a  Contract 
A.    There  Must  Be  Two  Parties 

STOBY  CASE 

George  Williams  was  the  San  Francisco  represen- 
tative of  Counselman  and  Bingham,  bankers.  When 
CoiHiselman  and  Bingham  placed  an  issue  of  Cali- 
fornia public  service  bonds  on  the  market,  Williams 
realized  that  the  bonds  were  an  excellent  source  of 
investment,  and  attempted  to  purchase  three-fourths 
of  the  entire  lot  placed  with  him  to  sell. 

He  signed  and  mailed  the  following  order  blank  to 
the  New  York  office: 

January  15,  1915. 

This  day,  I  George  Williams,  have  purchased  of 
Counselman  and  Bingham  fifty  Western  Hydro  Elec- 
tric Bonds  for  which  I  agree  to  pay  $5,500. 

(Signed)  George  Williams, 
Accepted : 

George  Williams, 
Western  Manager  of  Counselman  and  Bingham. 

When  Counselman  and  Bingham  received  this  or- 
der, they  appreciated  more  fully  the  value  of  the 
bonds  and  refused  to  deliver  them;  the  banking  firm 
contended,  among  other  reasons,  that  no  contract  ex- 
isted since  there  were  not  two  parties  to  the  agree- 
ment. Is  this  a  good  defense  to  a  suit  on  contract 
brought  by  Williams? 


2  .  CONTRACTS 

EUUNG  COUET  CASE 

Burditt  vs.  Colhurn,  Volume  62  Vermont  Reports, 
Page  231;  Volutne  13  Lawyer's  Reports  Annotated, 
Page  676. 

Rollins  Meacham,  was  administrator  of  the  estate 
of  Angeline  Gorham.  A  large  amount  of  money,  in- 
trusted to  him  as  administrator,  he  used  for  his  oAvn 
personal  wants  and  needs,  instead  of  administering 
it  for  the  benefit  of  the  estate,  as  was  his  duty. 

In  order  to  secure  the  estate  for  the  amount  of 
money  he  thus  coi^erted  to  his  own  use,  he  made  a 
promissory  note,  payable  to  himself  as  administrator, 
and  signed  by  himself  personally.  In  like  manner  he 
executed  a  mortgage  on  his  home  to  himself  as  ad- 
ministrator, signed  by  himself  personally.  The  note 
and  mortgage  were  kept  by  Rollins  Meacham,  and 
after  his  decease,  they  were  found  with  the  other 
papers  belonging  to  the  estate  of  Angeline  Grorham, 
deceased. 

After  Meacham 's  death,  Charles  Colburn,  the  de- 
fendant in  this  action,  was  appointed  his  administra- 
tor. Burditt,  the  plaintiff  herein,  was  appointed  to 
continue  the  administration  of  the  estate  of  Angeline. 
Colburn  turned  over  to  Burditt  the  note  and  mortgage 
in  question.  Then  Burditt  sued  the  defendant  Col- 
burn upon  this  note,  and  sought  to  have  the  mortgage 
foreclosed.  It  was  contended  by  the  defendant  that 
neither  the  note  nor  the  mortgage  was  a  valid  obli- 
gation because  neither  was  made  between  two  or 
more  parties. 

Decision :  The  mortgage  and  the  note  were  invalid 
as  obligations  of  the  deceased  person.  They  lack  a 
fundamental  element  of  a  binding  obligation — two  or 
more  contracting  parties. 


CONTRACTS  3 

Mr.  Justice  Tyler  said  in  part:  **The  mortgage 
must  be  held  invalid  for  want  of  contracting  parties. 
A  contract  necessarily  implies  a  concurrence  of  in- 
tention in  two  parties,  one  of  whom  promises  some- 
thing to  the  other,  who,  on  his  part  accepts  such  prom- 
ise. One  person  cannot  by  his  promise,  confer  a  right 
against  himself.  Until  the  concurrence  of  two  minds 
of  two  parties  there  is  no  contract. 

So  judgment  was  given  for  the  defendant,  Colbum. 

EUMNGLAW 

story  Case  Answer 

An  examination  of  the  general  nature  of  a  contract 
and  an  attempt  to  discover  the  essential  elements 
thereof  at  once  reveals  the  fact  that  the  most  funda- 
mental essential  is  the  presence  of  two  or  more  con- 
tracting parties.  Although  any  other  supposition,  at 
first  thought  may  seem  absurd,  yet  often  cases  arise 
where  one  who  is  acting  as  agent,  or  trustee,  or  ad- 
ministrator, attempts  to  contract  with  himself  indi- 
vidually. Tliis  cannot  be  done  because  the  law  re- 
quires that,  on  the  one  hand,  there  be  a  contracting 
party  who  receives  a  certain  right  by  the  contract  and 
and,  on  the  other,  a  different  party  from  whom  the 
right  is  secured.  Thus,  in  the  Story  Case,  George  "Wil- 
liams as  an  individual  obtained  no  right  under  the 
contract,  because  there  was  only  one  person  in  the 
agreement. 

B.     There  Must  Be  Mutual  Assent  of  the  Parties 
STORY  CASE 

Mr.  Judson  ovTied  a  large  farm  in  southern  Illinois. 
He  decided  that  he  would  discontinue  his  farming  and 


4  CONTRACTS 

move  to  Chicago,  if  he  could  dispose  of  his  property. 
He  told  a  neighbor,  Mr.  Jones,  of  his  intention  and 
offered  to  sell  him  his  farm  for  $10,000.  Mr.  Jones 
also  owned  a  farm,  but  it  was  less  valuable  than  the 
one  belonging  to  Mr.  Judson.  In  reply  to  the  offer 
of  Mr.  Judson  he  wrote  him  this  letter : 

**My  dear  Mr.  Judson: 

I  would  like  very  much  to  own  your  farm,  but 
at  present  I  cannot  accept  your  offer.  If  I  am 
able  to  sell  my  farm  for  a  good  price  in  the  near 
future.  I  will  buy  yours,  unless  you  have  sold 
it  in  the  meantime. 

Respectfully, 

J.  W.  Jones.'' 

Some  months  later  Mr.  Jones  sold  his  farm  for  a 
very  good  price ;  when  Mr.  Judson  heard  of  the  sale, 
he  went  immediately  to  Mr.  Jones  and  requested  him 
to  purchase  the  farm  according  to  his  agreement.  Mr. 
Jones  replied  that  he  had  concluded  that  he  would  not 
buy  another  farm.  Thereupon,  Mr.  Judson  brought 
an  action  against  Jones  for  breach  of  a  contract. 

"What  should  the  court  hold  in  this  casef 

EULINa  COURT  CASE 

Stagg  v.  Compton,  Volume  81  Indiana  Reports,  Page 
171. 

In  this  case  the  plaintiff  Stagg  had  a  horse  which 
he  desired  to  sell.  When  he  heard  that  the  defend- 
ant wished  to  purchase  a  horse,  he  wrote  a  letter, 
offering  to  sell  the  animal  in  question  to  the  defend- 
ant for  $200. 

The  defendant  some  days  later  wrote  the  following 
letter  in  reply  to  thc3  plaintiff *s  letter: 


CONTEACTS  5 

**I  think  I  might  purchase  your  horse  at  $200, 
the  price  you  ask  me.    How  can  I  get  it?    I  de- 
sire it  at  once  if  it  will  suit  me ;  I  am  quite  certain 
it  will.    Please  reply  at  once,  and  oblige, 
Yours  truly, 

A.  B.  Compton/' 

In  an  action  brought  for  the  price  of  the  horse,  the 
question  was  whether  the  foregoing  constituted  a  writ- 
ten contract  for  the  sale  of  the  animal  in  question. 

Decision:  Those  two  letters  in  themselves  do  not 
make  a  written  contract  between  the  parties.  The 
offer  of  the  plaintiff  was  to  seU  unconditionally.  But 
the  defendant  did  not  accept  absolutely.  He  said  only 
that  he  might  purchase  the  animal,  in  case  it  suited 
him.  Since  there  was  no  meeting  of  their  minds,  the 
two  letters,  recited  above,  did  not  make  a  contract  be- 
tween them. 

Therefore  it  was  held  that  there  was  no  written 
contract  for  the  sale  of  a  horse. 

RUIiING  LAW 

^  Story  Case  Answer 

A  contract  is  a  relation  which  is  voluntarily  as- 
sumed by  the  parties  to  it.  A  contractual  obligation, 
speaking  of  a  contract  in  a  strict  sense,  is  never  im- 
posed upon  a  person  without  his  consent.  Thus  it  is 
a  fundamental  essential  of  a  contract  that  there  be 
mutual  assent  between  the  contracting  parties. 

If  one  party  to  an  agreement  is  thinking  of  one 
thing,  and  the  other  is  thinking  of  something  else, 
obviously  there  is  no  contract,  because  their  minds 
have  never  met  upon  a  common  basis.  There  is  no  mu- 
tual assent. 


6  CONTRACTS 

Again,  the  parties  may  understand  clearly  all  the 
terms  of  a  proposed  agreement,  but  one  party  may 
be  unwilling  at  that  time  to  give  his  binding  consent, 
notwithstanding  the  fact  that  he  desires  to  enter  the 
agreement  at  a  future  time  or  makes  a  favorable  re- 
mark thereto.  But  unless  he  unequivocally  and  un- 
conditionally assents,  mutual  assent  is  lacking  and  no 
contract  results. 

In  the  Story  Case,  mutual  assent  is  lacking  because 
Mr.  Jones  does  not  agree  to  the  offer  made  by  Jud- 
son.  In  fact  he  clearly  states  that  there  is  no  accep- 
tance. It  is  obvious  that  Judson  is  not  obligated  to 
hold  the  farm  for  Jones,  and  that  mutuality  of  con- 
tract is  lacking.  Therefore  judgment  should  be  given 
in  favor  of  Jones. 


C.    There  Must  Be  a  Distinct,  Common  Understanding 
STOEY  CASE 

Mr.  Brandon,  a  dealer  in  grain,  had  in  his  ware- 
house a  large  quantity  of  wheat,  which  he  was  attempt- 
ing to  sell  as  soon  as  possible.  He  wrote  a  letter  to 
the  American  Milling  Company,  in  which  he  stated 
that  he  was  willing  and  ready  to  sell  5,000  bushels  of 
wheat  at  60  cents  per  bushel.  At  the  end  of  the  let- 
ter he  stated  that  the  offer  was  to  be  withdrawn  un- 
less it  was  accepted  within  one  day's  time.  The  man- 
ager of  the  American  Milling  Company  received  the 
letter,  opened  it,  but  before  he  read  it,  was  called  out 
of  his  office.  A  friend  of  the  manager  entered  and, 
as  he  seated  himself  at  the  latter 's  desk,  saw  the  let- 
ter and  absent  mindedly  inserted  a  zero  after  the 
**one'',  so  that  the  letter  read  that  the  offer  would 


CONTRACTS  7 

be  withdrawn  unless  it  was  accepted  in  ten  days* 
time. 

The  manager  read  the  letter,  and  four  days  later 
wrote  an  answer  accepting  the  5,000  bushels  of  wheat 
at  the  stated  price.  Mr.  Brandon  had  held  the  offer 
open  as  long  as  he  had  agreed,  and  had  thereafter 
sold  all  the  wheat  he  had  on  hand.  "When  this  was 
communicated  to  the  American  Milling  Company,  it 
brought  suit  to  recover  damages  for  a  breach  of  con- 
tract, which  it  claimed  to  have  made  with  Mr. 
Brandon. 

Was  there  a  binding  contract  between  the  parties  ? 

RULING  OOUET  CASE 

Morton  vs.  McGavock,  Volume  57  Nebraska  Reports, 
Page  385;  Volume  77  Northwestern  Reporter,  Page 
785. 

The  controversy  in  this  case  arose  out  of  an  alleged 
contract  to  which  there  were  three  parties. 

The  second  party,  Davis,  agreed  to  do  certain  pav- 
ing for  the  city  of  Omaha.  The  city  of  Omaha,  named 
as  the  party  of  the  first  part,  agreed  to  pay  Davis  for 
his  work  at  a  certain  rate  as  soon  as  the  work  was 
completed  by  Davis,  and  approved  by  the  city  engi- 
neer. McGavock,  who  was  the  third  party  to  the  con- 
tract promised,  among  other  things,  to  see  to  it  that 
Davis  paid  the  wages  of  the  persons  employed  in  doing 
the  paving. 

McGavock 's  obligation  or  promise  was  contained  in 
the  following: 

*'And  if  the  laborers  are  not  paid  in  full  by 
party  of  the  second  part,  the  party  of  third  part 
agrees  to  pay  for  said,  labor,  or  any  part  thereof, 


8  CONTEACTS 

which  shall  not  be  paid  by  the  second  party  within 
ten  days  after  the  money  for  such  labor  becomes 
due  and  payable." 

The  foregoing  constituted  the  proposed  contract  as 
it  was  presented  to  the  city  for  their  acceptance.  Be- 
fore they  accepted,  however,  there  was  inserted  by  the 
city  authorities  an  additional  clause  to  the  effect  that 
Davis  would  not  be  paid  for  his  services  until  the  city 
of  Omaha  received  certain  money  from  the  Commis- 
sioners of  Douglas  County. 

Upon  this  contract,  the  plaintiff,  one  of  the  laborers 
engaged  by  Davis,  brought  this  action.  For  the  first 
time,  when  the  action  was  begun,  McGavock  learned 
that  the  additional  clause  had  been  inserted  in  the  con- 
tract without  his  consent. 

Decision:  The  agreement  which  the  defendant 
signed,  and  the  agreement  accepted  by  the  city,  were 
entirely  different.  It  was  one  thing  to  agree  to  pay 
wages  if  Davis  did  not  settle  within  ten  days  after 
they  fell  due,  when  Davis  was  to  receive  money  to 
meet  his  obligation  when  the  work  was  done;  it  was 
quite  another  thing  to  agree  to  so  pay  when  Davis  was 
not  to  receive  anything  until  the  happening  of  an  in- 
dependent contingency.  Here  there  was  no  common 
understanding  between  the  parties.  The  proposition 
made  by  the  defendant,  by  signing  the  contract  as  it 
was  tendered  first,  was  not  accepted  by  the  city  when 
it  approved  an  entirely  different  agreement.  Any 
change  which  altered  the  legal  effect  of  the  proposal, 
even  if  made  by  a  stranger,  would,  under  such  cir- 
cumstances, prevent  the  concurrence  of  the  minds  es- 
sential to  make  a  binding  contract. 

Therefore  judgment  was  given  for  the  defendant, 
McGavock. 


CONTRACTS  9 

EXJUNG  LAW 
Story  Case  Answer 

It  has  just  been  stated  that  mutual  assent  is  a  fun- 
damental essential  of  a  binding  contract.  By  way  of 
further  explanation  of  that  principle,  it  may  be  said 
that  the  parties  must  have  a  distinct,  common  under- 
standing as  to  the  nature  and  the  terms  of  the  contract. 
That  is,  if  one  party  has  one  thing  in  mind  when  he 
makes  an  offer,  and  the  person  to  whom  the  offer  is 
made  has  another  tiling  in  mind  when  he  accepts,  no 
contract  results,  because  there  is  no  common  under- 
standing. 

It  does  not  matter  how  this  misunderstanding  may 
arise,  provided  it  is  not  through  the  negligence  of 
either.  Neither  party  is  bound  by  the  contract.  In 
the  Story  Case  Mr.  Brandon  intended  to  give  the  Mill- 
ing Company  only  one  day  in  which  to  accept,  a  de- 
mand within  his  rights.  The  manager  of  the  Milling 
Company  was  mistaken  as  to  the  time,  and,  although 
this  mistake  was  due  to  no  negligence  on  the  part  of 
Brandon,  yet  from  the  mistake  resulted  a  misunder- 
standing between  them  and  the  result  must  be  that  no 
binding  contract  was  made  by  the  acceptance  of  the 
Milling  Company  after  the  expiration  of  the  one  day. 


D.    There  Must  Be  a  Proposal  Which  Results  in  a 

Promise  or  an  Act  When  Accepted 

STOEY  CASE 

Henry  Nightingale  in  a  letter  to  his  nephew,  John 
Nightingale,  promised  to  pay  or  give  him  $500  on  his 
next  birthday.  John  received  the  letter  and  thanked 
his  uncle  for  the  promised  gift. 


10  CONTEACTS 

When  John's  birthday  arrived  Mr.  Nightingale  did 
not  send  the  $500  as  he  had  promised.  A  few  days 
later  John  wrote  him  reminding  him  of  his  promise, 
and  asking  that  the  money  be  sent  at  once  as  he  needed 
it.  His  micle  replied  that  he  had  decided  that  he  was 
unable,  as  well  as  unwilling,  to  give  the  money  which 
he  had  promised  some  months  before. 

John  then  sued  him  for  the  money.  What  should 
the  court  decide  under  the  foregoing  circumstances  ? 

EULING  OOTTET  CASE 

Lillie  WUliams  vs.  Forbes,  Admr.,  Volume  114  Illi- 
nois Reports,  Page  167. 

Lillie  Williams  who  had  lived  for  a  long  time  with 
her  aunt,  Delilah  Deeds,  had  won  the  admiration  and 
affections  of  her  aunt.  Some  time  before  her  death, 
the  aunt  made  out  a  promissory  note  in  the  sum  of 
$2500  to  be  paid  to  her  niece  after  her  death. 

After  the  death  of  the  aunt,  the  niece  presented  this 
note  to  George  Forbes,  the  administrator  of  Delilah 
Deeds.  He  refused  to  pay  it,  and  this  action  was  begun 
on  the  note. 

The  defendant  contended  that  the  note  was  only  a 
gift  by  the  aunt;  that  it  was  not  supported  by  a  con- 
sideration ;  that  it  called  for  no  act  or  promise  on  the 
part  of  the  niece  which  would  make  it  binding. 

Decision :  The  giving  of  this  promissory  note  was 
but  a  promise  to  make  a  gift.  A  gift  may  be  with- 
drawn at  any  time  until  it  is  executed,  that  is,  the 
time  when  it  is  paid.  Thus,  this  note  gave  the  niece 
no  legal  right  whatever. 

It  was  held  that  the  plaintiff,  Lillie  Williams,  could 
not  recover  on  the  note  in  question. 


CONTRACTS  U 

BXTUNGLAW 
Story  Case  Answer 

In  order  to  create  a  binding  agreement  or  contract, 
every  promise  by  one  person  made  in  favor  of  another 
must  be  supported  by  a  consideration  moving  from 
such  person.  Thus,  a  proposal  made  by  one  person 
to  another,  which  does  not  call  for  a  promise,  act,  or 
some  other  consideration  from  the  person  to  whom  it 
is  made,  does  not  constitute  a  binding  contract. 

However,  if  such  a  promise  is  made  under  seal,  in 
the  absence  of  statutory  changes  it  becomes  binding, 
even  though  there  is  no  consideration  moving  from 
the  person  to  whom  the  promise  is  made.  A  sealed 
contract  is  binding  without  a  consideration,  because 
the  presence  of  the  seal  dispenses  with  its  necessity. 

In  the  Story  Case,  the  promise  made  by  Mr.  Nightin- 
gale was  without  consideration ;  it  was  a  bare  promise ; 
it  did  not  contemplate  any  promise  or  act  on  the  part 
of  the  nephew.  Consequently  it  is  not  a  binding  agree- 
ment and  the  nephew  could  not  recover  from  his  uncle. 
Had  the  promise  been  in  writing,  signed  and  sealed  by 
his  uncle,  then  it  would  have  been  binding,  even  though 
without  consideration. 


E.    There  Must  Be  an  Active  Intention  to  Accept 
the  Proposa) 

STOET  CASE 

George  Hanson  conducted  a  poultry  farm  ui  a  small 
suburban  towTi  near  the  city  of  Chicago.  For  many 
years  he  had  been  accustomed  to  deal  with  the  Frank- 
lin Street  Produce  Company.  He  would  ship  chickens 
to  them,  which  they  would  sell,  and  send  him  the  mar- 
ket price  therefor  at  the  end  of  the  month.    It  was 


12  CONTEACTS 

never  customary  for  the  Produce  Company  to  send 
notice  to  Hanson  accepting  each  consignment. 

On  one  occasion  Hanson  sent  in  a  large  consignment 
of  fowls.  The  Produce  Company  received  them  and 
had  them  placed  in  their  storage  plant.  Several  days 
later  Hanson  was  in  the  city,  and  in  a  discussion  be- 
tween himself  and  the  manager  of  the  Produce  Com- 
pany, a  disagreement  arose  as  to  the  price  which 
should  be  paid  for  that  consignment.  Thereupon  Han- 
son demanded  the  return  of  his  chickens.  The 
Produce  Company  refused  to  return  them.  Suit  was 
brought  by  Hanson.  He  claimed  that  there  was  no  con- 
tract in  the  case  as  stated,  because  he  was  never  noti- 
fied by  the  company  that  they  had  accepted  the  con- 
signment of  chickens. 

Under  the  foregoing  circumstances  what  should  the 
court  decide? 

BTTUNG  COUBT  CASE 

Lungstrass  vs.  German  Insurance  Company,  Volume 
48  Missouri  Reports,  Page  201;  Volume  8  American 
Reports,  Page  100. 

The  plaintiff  in  this  action  had  been  appointed  agent 
of  the  German  Insurance  Company  for  the  towm  of 
Sedalia.  While  acting  as  agent  for  it,  he  decided  to 
insure  his  own  property  in  the  defendant  company. 
He  made  out  and  sent  forward  an  application  for  in- 
surance on  his  property.  When  his  policy  was  re- 
turned, he  found  that  he  had  been  charged  with  a 
premium  of  2^/2  per  cent.  He  was  not  satisfied  with 
the  rate  and  he  sent  it  back  for  a  reduction.  It  was 
reduced  to  2  per  cent  and  returned.  The  plaintiff  re- 
ceived the  policy,  as  reduced,  on  the  6th  of  November. 


CONTEACTS  13 

He  immediately  made  an  entry  in  his  account  with  the 
company,  recognizing  the  change  of  rate  and  accept- 
ing the  policy  as  changed. 

Early  in  the  morning  of  the  7th,  the  plaintiff's  goods 
were  burned,  and  on  the  following  day  he  telegraphed 
the  company  of  his  loss,  asking  for  an  immediate  set- 
tlement. The  company  refused  and  this  action  was 
brought  on  the  policy. 

In  defense  of  the  action  the  defendant  contended 
that  the  plaintiff  had  never  accepted  the  policy,  be- 
cause he  had  sent  no  notice  to  the  company  of  his  in- 
tention to  accept.  On  the  part  of  the  plaintiff  it  was 
contended,  that  because  of  the  relationship  between 
him  and  the  company,  it  was  unnecessary  to  send  no- 
tice of  an  intention  to  accept.  He  contended  that  his 
act  of  entering  the  same  on  the  books  of  the  com- 
pany, concerning  which  he  made  monthly  reports,  con- 
stituted an  acceptance. 

The  opinion  of  the  court  was  delivered  by  Mr.  Jus- 
tice Bliss : 

"It  is  true  that  no  contract  can  rise  from  a  propo- 
sition or  offer  on  one  side  until  it  is  accepted  on  the 
other.  And  it  is  also  true  that  this  acceptance  must 
be  evidenced  by  some  act  that  binds  the  party  accept- 
ing. A  man's  mental  resolution,  that  can  be  changed, 
is  not  sufficient.  The  usual  mode  of  accepting  a  prop- 
osition made  by  correspondence  is  by  notice  of  accept- 
ance, and  though  it  was  formerly  held  that  it  did  not 
ripen  into  a  contract  until  receipt  of  the  notice,  yet 
the  doctrine  now  is  held  that  the  contract  is  complete 
when  the  acceptance  is  forwarded,  without  reference 
to  the  time  of  its  reception. 

But  notice  is  not  the  only  evidence  of  acceptance. 
Any  appropriate  act  which  accepts  the  terms  as  they 


14  CONTRACTS 

were  intended  to  be  accepted,  so  as  to  bind  the  ac- 
ceptor, just  as  clearly  evidences  the  concurrence  of  the 
parties — ^the  bringing  their  minds  together — as  a  for- 
mal letter  of  acceptance. 

Because  of  the  relationship,  and  the  customary 
course  of  dealing  between  the  parties,  it  was  held  that 
notice  of  acceptance  was  not  necessary;  and  that  the 
act  of  the  plaintiff  in  entering  his  policy  on  the  ac- 
coxmts  of  the  company  kept  by  him  was  a  sufficient 
act  of  acceptance." 

Accordingly,  it  was  held  that  the  plaintiff  might 
recover. 

RULING  LAW 
Story  Case  Answer 

In  a  given  case  there  may  be  mutual  assent  between 
the  parties  to  a  transaction.  But  no  contract  will  re- 
sult from  that  mutual  assent  unless  in  some  way  the 
assent  of  one  is  made  known  to  the  other.  Therefore,  it 
is  generally  necessary  that  a  person,  to  whom  an  offer 
is  made  or  communicated,  should  accept  and  manifest 
this  acceptance  by  some  active  and  affirmative  act  or 
word.  Mere  mental  resolution,  not  communicated  to 
the  person  making  the  offer,  is  not  sufficient  generally 
to  make  of  their  mutual  assent  a  binding  contract. 

But  under  certain  circumstances,  as  in  those  where 
a  certain  relation  exists  between  the  parties,  or  where 
a  long  course  of  conduct  has  been  carried  on  between 
them,  this  active  acceptance  may  not  be  necessary. 

In  the  Story  Case,  had  the  shipment  been  the  first 
one  made  by  Hanson  to  the  Produce  Company,  prob- 
ably no  contract  would  have  resulted  by  the  mere  re- 
ceipt of  the  shipment.  But,  because  of  the  fact  that 
notice  of  acceptance  had  been  dispensed  Avith  in  previ- 


CONTRACTS  15 

ons  transactions  of  exactly  the  same  nature,  a  conrt 
would  hold  that  the  mere  shipment  and  receipt  thereof 
of  the  Produce  Company  would  make  a  contract. 


2.     Contract  Classified 

A.     Contract  May  Be  Under  Seal  or  May  Be  Simple 

(1.)     Sealed  Contracts 

STOEY  CASE 

Mr.  Joseph  Mcintosh  had  a  nephew,  Henry,  of  whom 
he  was  very  fond.  When  Henry  was  eighteen  years 
of  age,  his  uncle  made  out  and  delivered  to  him  the 
following  note: 

"When  my  nephew,  Henry  Mcintosh  reaches 
his  twenty-first  birthday,  I  promise  to  pay  him 
$1,000. 

Signed,  sealed  and  delivered,  April  28,  1890. 
(Signed)     Joseph  Mcintosh,  (Seal) 

Under  the  word  ^'seal"  a  scrawl  was  made  with  the 
pen. 

Later,  and  before  Henry  reached  the  age  of  twenty- 
one  years,  he  became  wild  and  reckless.  His  uncle 
became  disappointed  with  his  conduct  and  when  the 
nephew  presented  the  note  in  question  on  his  twenty- 
first  birthday,  his  uncle  refused  to  pay  it,  emphatically 
stating  that  he  would  never  satisfy  it  under  any  cir- 
cumstances. 

Thereupon  Henry  brought  suit,  to  which  the  uncle 
pleaded  that  there  was  no  consideration  for  the  note, 
and  therefore  it  was  not  a  binding  obligation. 

What  should  be  the  judgment  of  the  court  under  the 
foregoing  circumstances? 


16  CONTEACTS 

RUUNG  OOITET  CASE 

James  Bendleman  vs.  Elizabeth  Bendleman,  Volume 
156  Illinois  Reports,  Page  568. 

Jerome  Rendleman  and  his  wife  executed  a  convey- 
veyance  of  land  to  Mrs.  Rendleman,  the  wife  of  Dennis 
Rendleman. 

Jerome  made  out  the  deed,  signed,  sealed  and  deliv- 
ered it  to  Dennis.  Subsequently  Dennis  gave  it  to  his 
wife.  At  the  time  Jerome  delivered  the  deed,  Dennis, 
his  son,  offered  him  one  dollar  as  payment  therefor. 
The  father  indignantly  refused  to  accept  the  money. 

Later  he  brought  this  bill,  asking  that  this  deed  be 
delivered  up  and  declared  void.  Among  other  reasons 
he  assigned  for  having  the  deed  cancelled,  was,  that  the 
deed  was  given  without  consideration.  The  defendant 
replied  to  this,  that  it  was  xmnecessary  for  a  deed  to 
be  supported  by  a  consideration,  when  the  deed  is 
sealed. 

Decision :  At  common  law  a  sealed  instrument  was 
a  solemn  instrument,  and,  because  of  this,  the  law  re- 
quired no  consideration  in  order  to  make  it  binding. 
This  does  not  imply  that  the  seal  imports  considera- 
tion, but  that  consideration  is  rendered  unnecessary  by 
the  solemn  form  of  the  instrument. 

So  it  was  held  that  the  plaintiff  could  not  have  the 
deed  cancelled. 

RUUNG  LAW 
Story  Case  Answer 

At  common  law  contracts  were  either  simple  or 
sealed  contracts.  The  latter  are  often  referred  to  spec- 
ialties. The  chief  characteristic  of  a  sealed  contract  at 
common  law  is  that  it  becomes  a  binding  obligation 
when  sealed  and  delivered,  even  though  no  consider- 


CONTRACTS  17 

ation  is  given  for  the  same.  The  solemnity  connected 
with  the  execution  of  a  sealed  contract  took  the  place  of 
consideration.  It  is  often  said  that  the  presence  of  the 
seal  imported  consideration.  This  means  merely  that 
consideration  was  nnnecessary. 

At  common  law,  in  early  times,  it  was  necessary 
that  the  seal  should  be  a  wax  impression  upon  the 
paper.  But  in  later  times  the  courts  no  longer  require 
this  as  an  essential  to  a  sealed  contract.  A  scrawl 
made  with  the  pen,  or  the  word  *'seal"  written  after 
the  name,  are  now  generally  held  to  be  sufficient,  if 
they  are  accompanied  with  an  intent  that  the  instru- 
ment should  be  sealed.  In  the  Story  Case,  George  Mc- 
intosh may  be  held  upon  the  note  in  question,  even 
though  no  consideration  was  given.  The  scrawl  made 
with  his  pen  is  sufficient  to  make  it  a  sealed  contract. 


(2.)     Simple  Contracts 
STOEY  CASE 

Harry  Branscomb,  who  owned  a  number  of  fine 
horses,  promised  to  give  one  to  his  brother  Frank  after 
a  few  weeks.  Frank  insisted  that  the  promise  should 
be  put  in  writmg,  because  he  feared  that  his  brother 
might  change  his  mind  in  the  meantime  and  he  thought 
that  by  having  the  promise  made  in  writing,  he  could 
enforce  it,  in  case  his  brother  should  change  his  mind. 

Before  the  time  came  when,  according  to  the  writing, 
the  horse  was  to  be  delivered  to  Frank,  Harry  sold  all 
of  his  horses.  This  action  angered  Frank  and  he  de- 
cided to  sue  his  brother  for  damages.  In  defense 
Harry  contended  that,  because  there  was  no  consider- 
ation, his  promise  was  not  legally  binding  upon  him. 
On  the  other  hand  it  was  contended  by  Frank  that  it 


18  CONTRACTS 

was  not  material  that  there  was  no  consideration, 
since  the  promise  was  made  in  writing. 

Under  these  facts,  do  you  think  that  Harry  Brans- 
comb  is  liable  for  damages? 

EXJUNG  COimT  CASE 

Hughes  vs.  Rann,  Volume  7  Term  Reports,  Note, 
Page  350. 

During  the  respective  life-times  of  Mary  Hughes 
and  J.  Hughes  a  certain  dispute  arose  between  them. 
They  agreed  to  submit  the  matter  to  arbitration.  The 
arbitrators,  having  made  an  investigation  into  the  con- 
troversy, decided  that  Mary  Hughes  should  pay  J. 
Hughes  the  sum  of  983  pounds. 

Thereafter  she  died  and  Eann,  the  present  defend- 
ant, was  appointed  her  executor.  Although  sufficiently 
able  to  have  done  so  in  her  life  time,  Mary  Hughes 
never  paid  the  983  pounds  which  the  arbitrators  found 
that  she  owed  to  J.  Hughes.  Rann,  her  executor  after 
her  death,  agreed  by  a  promise  in  writing  to  pay  the 
sum  in  question.  For  his  promise,  however,  there  was 
no  consideration. 

J.  Hughes  brought  this  action  upon  the  promise 
made  by  Rann,  executor  of  the  estate  of  Mary  Hughes, 
deceased. 

In  defense,  Rann  contended  that  he  was  not  liable 
upon  the  promise  because  it  was  not  supported  by  a 
consideration.  In  reply  to  this  the  plaintiff  contended 
that  it  was  immaterial  whether  or  not  there  was  a  con- 
sideration for  this  promise,  because  the  promise  was 
made  in  writing. 

Decision:  The  defendant,  Rann,  cannot  be  held 
liable  upon  this  promise,  even  though  in  writing,  be- 
cause it  is  not  supported  by  a  consideration. 


CONTRACTS  19 

Lord  Chief  Baron  Skynner  said  in  part:  "All  con- 
tracts are  divided  into  agreements  by  specialty  and 
agreements  by  parol — simple  contracts.  Nor  is  there 
any  such  third  class  as  some  of  the  counsel  have  en- 
deavored to  maintain,  as  contracts  in  writing.  If  they 
be  merely  written  and  not  sealed,  they  are  parol  simple 
contracts — and  a  consideration  must  be  proved. ' ' 

Accordingly,  judgment  was  given  for  the  defendant 
in  this  action. 

ItUIJNGI.AW 
Story  Case  Answer 

As  was  stated  in  the  foregoing  section,  all  contracts 
are  either  simple  or  sealed  contracts.  A  sealed  instru- 
ment becomes  a  binding  obligation  by  virtue  of  its 
form  and  execution,  and  a  consideration  therefor  was 
imnecessary.  On  the  other  hand,  as  is  illustrated  more 
fully  later,  a  simple  contract  must  be  supported  by  a 
consideration,  before  it  becomes  a  binding  obligation. 

Quite  frequently  we  speak  of  contracts  which  are 
written  and  contracts  which  are  oral.  But  a  contract, 
whether  oral  or  written,  is  termed  a  simple  contract 
and  must  always  contain  a  consideration.  In  the  Story 
Case,  Frank  was  mistaken  when  he  thought  that  a 
written  contract  would  be  binding,  when  unsupported 
by  a  consideration.  By  having  it  reduced  to  writing, 
he  could  no  more  easily  have  it  enforced  than  if  it  had 
been  a  mere  oral  promise. 


B.     Contracts  May  Be  Express  or  Implied 

(1.)     Express  Contracts 

STORY  CASE 

Mr.  "William  Mason  was   a   farmer  who   raised   a 
large  amount  of  wheat.    A  few  weeks  before  the  wheat 


20  CONTRACTS 

was  ripe,  the  Minneapolis  Milling  Company  sent  an 
agent  down  to  purchase  the  grain  for  delivery  when 
harvested.  They  entered  into  an  agreement  by  which 
Mason  was  to  sell  to  the  Milling  Company  all  of  his 
grain  when  it  was  harvested  and  threshed.  It  was 
agreed  that  Mason  should  be  paid  the  market  price 
for  his  wheat  at  the  time  of  delivery  to  the  Company's 
elevator  in  Minneapolis.  Each  party  gave  the  other 
a  memorandum  of  the  agreement. 

The  Milling  Company  refused  to  pay  for  the  wheat 
after  it  was  received  and  Mason  was  compelled  to 
sue  for  his  money.  In  the  trial  of  the  case  the  ques- 
tion arose  as  to  whether  or  not  this  was  an  express 
contract.  The  company  maintained  that  if  any  con- 
tract existed  it  was  implied,  since  the  time  of  delivery 
and  the  amount  were  not  expressed. 

Under  the  foregoing  circumstances  what  should  the 
court  hold  as  to  the  nature  of  the  contract,  whether 
express  or  implied? 

EXTUNG  COURT  CASE 

Bovell  vs.  VoorJieis,  Volume  20  Illinois  Appeal  Re- 
ports, Page  538. 

Lutes  and  his  brother  had  been  engaged  for  a  num- 
ber of  years  in  the  business  of  selling  dry  goods.  In 
1879  they  failed  in  business  and  made  an  assignment 
of  all  of  their  property  for  the  benefit  of  creditors. 

Lutes  and  his  brother  owed  a  large  amount  of  money 
to  Voorheis,  the  defendant  in  this  action.  The  latter 
purchased  all  of  the  stock  in  trade,  formerly  belonging 
to  Lutes  Brothers,  and  opened  up  a  new  business  of 
the  same  kind.  The  defendant  engaged  him  as  man- 
ager of  the  new  store.    No  written  contract  was  en- 


CONTEACTS  21 

tered  into  by  and  between  the  parties  as  to  the  com- 
pensation which  was  to  be  paid  Lutes  for  his  services. 
However,  the  testimony  in  the  case  showed  an  under- 
standing that  he  was  to  receive  one-half  the  profits 
of  the  business,  a  half  of  which  he  was  to  retain,  and 
a  half  of  which  was  to  be  applied  to  the  payment  of 
the  debt  which  Lutes  owed  Voorheis. 

For  six  years  Lutes  acted  as  manager  of  the  bus- 
iness. At  this  time  he  died.  During  these  six  years 
the  business  had  prospered  and  large  profits  had  been 
made.  But  at  no  time  had  there  been  any  settlement 
made  between  Voorheis  and  Lutes  as  to  the  compen- 
sation of  the  latter. 

After  the  death  of  Lutes,  Bovell,  the  plaintiff,  was 
appointed  his  administrator.  He  brought  this  action 
to  recover  of  the  defendant  one-half  the  profits  made 
during  the  time  that  Lutes  acted  as  manager  for  the 
defendant.  The  defendant  contended  that,  since  there 
was  no  express  contract,  that  he  was  liable  only  for 
a  reasonable  compensation  for  the  services  of  Lutes, 
which  was  considerably  less  than  one-half  the  profits 
made  during  that  time. 

Decision:  The  testimony  in  the  case  indicated  an 
express  contract  between  the  parties.  The  fact  that 
it  was  not  reduced  to  writing  is  immaterial.  Further, 
the  contract  of  employment  is  no  less  express,  because 
the  *' price"  or  ''amount"  that  Lutes  was  to  receive 
was  not  agreed  upon  in  advance,  but  was  made  to  de- 
pend upon  the  uncertain  result  of  some  business  ven- 
ture, or  upon  other  contingencies  which  would  in  the 
future  determine  the  compensation  he  would  receive. 

Accordingly,  it  was  held  that  the  plaintiff  was  en- 
titled to  recover  one-half  the  profits  made  in  the  bus- 
iness during  the  six  years  that  Lutes  acted  as  manager. 


22  CONTRACTS 

EULING  LAW 
Story  Case  Answer 

Contracts  may  be  express  or  implied  in  respect  to 
the  manner  in  which  they  are  entered  into. 

An  express  contract  is  one  where  the  parties  ex- 
pressly agree  upon  the  terms  of  the  contract.  They 
agree  upon  the  time  for  performance,  the  amount  to 
be  received,  or  whatever  the  nature  of  the  contract 
demands.  But  a  contract  is  none  the  less  express  be- 
cause the  parties  leave  some  term  dependant  upon 
some  future  event.  They  have  expressly  agreed 
upon  that  as  a  determining  factor. 

Thus,  in  the  Story  Case,  there  is  no  doubt  but  that  the 
contract  there  entered  into  was  an  express  contract; 
this  is  true  notwithstanding  that  at  the  time  it  was 
made,  neither  knew  how  many  bushels  of  grain  there 
would  be  and  neither  knew  what  the  market  price  of 
wheat  would  be  at  the  time  for  delivery. 


(2.)     Implied  Contracts 
STORY  CASE 

Dr.  Jones  was  a  veterinary  surgeon  who  practiced 
his  profession  in  the  city  of  Chicago.  During  one 
summer  he  spent  his  vacation  on  a  farm  owned  and 
managed  by  his  brother.  While  there,  a  horse,  belong- 
ing to  his  brother,  became  very  sick.  Dr.  Jones  was 
requested  to  try  to  relieve  the  animal.  He  found  it  in 
a  serious  condition.  He  worked  all  day  in  caring  for 
the  animal  and  by  night  the  horse  was  much  better. 
When  Dr.  Jones  returned  to  his  office  in  Chicago,  he 
sent  a  bill,  amounting  to  $25,  to  his  brother  for  his 
professional  services. 


CONTKACTS  23 

Because  Dr.  Jones  had  paid  no  board  during  the 
time  that  he  remained  on  the  farm,  his  brother  re- 
fused to  pay  the  bill.  Dr.  Jones  thereupon  brought 
suit  for  the  recovery  of  $25,  which  he  claimed  was 
a  reasonable  sum  for  his  services. 

What  should  be  the  decision  of  the  court  in  the  fore- 
going case?  Do  you  think  it  is  significant  whether  or 
not  Dr.  Jones  paid  for  his  board  and  lodging  while  on 
the  farm?  Would  the  opinion  of  the  court  be  altered 
had  he  been  called  to  travel  the  entire  distance  from 
the  city? 

RXTLING  COTTET  CASE 

Hertzog  vs.  Hertzog,  Volume  29  Pennsylvania  State 
Reports,  Page  465. 

John  Hertzog  was  twenty-one  years  of  age  in  the 
year  1825.  After  reaching  his  majority,  he  continued 
to  live  with  his  father,  who  was  a  farmer,  and  work 
for  him  on  the  farm.  He  spent  one  year  in  Virginia. 
When  he  returned  he  brought  his  wife  with  him,  and 
again  resided  with,  and  worked  for,  his  father.  Some- 
time later  his  father  put  him  on  another  farm,  which 
was  owned  by  the  father,  and  two  or  three  years  later, 
the  father  and  his  wife,  moved  into  the  house  with  his 
son  John,  and  there  continued  to  live  until  the  death 
of  the  father  in  1849. 

This  suit  was  brought  by  John  to  recover  from  the 
estate  of  his  father  compensation  for  services  ren- 
dered to  the  latter  during  the  lifetime  of  the  father. 

The  defendant,  who  was  the  personal  representative 
of  the  father,  contended  that  there  could  be  no  recov- 
ery because  there  was  no  contract  by  which  the  son 
was  to  be  paid  anji;hing  for  his  services.  John,  how- 
ever, contended  that  there  was  an  implied  agreement 


24  CONTRACTS 

on  the  part  of  the  father  to  pay  for  the  services  ren- 
dered. 

Decision  by  Mr.  Justice  Lowrie :  Where  one  person 
renders  services  for  another,  a  promise  may  be  im- 
plied on  the  part  of  the  one  benefited  to  pay  for  such 
services.  This,  however,  is  a  question  of  fact  to  be 
determined  by  the  jury  under  all  the  facts  of  a  given 
case.  Implied  contracts  arise  under  circumstances, 
which,  according  to  the  ordinary  course  of  dealings 
and  the  common  understanding  of  men,  show  a  mutual 
intention  to  contract.  Where  services  have  been  ren- 
dered by  one  relative  for  another,  as  in  this  case,  the 
fact  of  relationship  is  strong  evidence  that  there  was 
no  agreement  that  such  services  should  be  compen- 
sated for.  Under  the  circumstances  of  this  case  the 
court  was  of  the  opinion  that  no  agreement  could  be 
implied  on  the  part  of  the  parent  to  make  compensa- 
tion to  his  son  for  services  of  the  latter.  But  if  we 
find  a  son  in  the  employment  of  his  father,  we  do  not 
infer  a  contract  of  hiring,  because  the  principle  of 
family  affection  is  sufficient  to  account  for  the  family 
association,  and  does  not  demand  the  inference  of  a 
contract.  So  it  was  held  that  John  could  recover  noth- 
ing from  his  father's  estate  for  the  services  he  ren- 
dered to  his  father  during  the  latter 's  lifetime. 

EUIING  COURT  CASE  No.  2 

Gaffney  vs.  Columbus  Railway  Company,  Volume  65 
Ohio  State  Reports,  Page  104 ;  Volume  61  Northwest- 
ern Reporter,  Page  152. 

At  Lancaster,  Ohio,  the  Columbus  Railway  Com- 
pany and  the  Cincinnati  Railway  Company  form  a 
junction  and  pass  on  opposite  sides  of  a  common  depot. 
The  distance  between  the  two  roads  at  the  depot  is 


CONTRACTS  25 

abont  forty  feet.  By  virtue  of  a  contract  which  each 
railway  company  had  with  the  United  States  Govern- 
ment to  carry  mail  between  certain  points,  it  became 
the  duty  of  each  to  transfer  the  mails  from  one  road 
to  the  other  when  required  in  the  course  of  transit. 

Gaifney  was  under  a  contract  with  the  government 
to  carry  all  mails  to  and  fro  between  the  depot  and 
the  Lancaster  post-office.  For  six  years  he  carried 
the  mail  from  one  train  to  the  other,  a  duty  which, 
as  stated  above,  belonged  to  the  railway  companies. 
He  thought  that  this  was  a  task  imposed  upon  him 
under  his  contract.  When  he  was  informed  by  a  gov- 
ernment official  that  it  was  not,  he  ceased  to  transfer 
the  mail  from  train  to  train  and  demanded  of  the  two 
roads  compensation  for  the  time  he  had  done  so.  They 
refused  to  recognize  any  such  claim  and  Gaffney  sued. 
He  contended  that  there  was  an  implied  agreement  on 
the  part  of  the  two  companies  to  pay  him  for  the  work 
he  had  done. 

The  company  contended  that  no  agreement  should 
be  implied  because  the  circumstances  of  the  case,  that 
is,  because  Gaffney  thought  he  was  under  a  duty  to 
do  this,  showed  that  Gaffney  never  expected  to  receive 
any  compensation  and  that  they  never  intended  to  give 
any  compensation. 

Mr.  Chief  Justice  Marshall,  who  delivered  the  opin- 
ion of  the  court,  said : 

**  Contracts  that  are  true  contracts  are  frequently 
termed  *  implied  contracts', — as  where,  from  the  facts 
and  circumstances,  a  court  or  jury  may  fairly  infer 
as  a  matter  of  fact  that  a  contract  existed  between 
the  parties,  explanatory  of  the  relation  existing  be- 
tween them.    Such  implied  contracts  are  not  generally 


2^  CONTRACTS 

different  from  express  contracts.  The  difference  ex- 
ists simply  in  the  mode  of  proof.  Express  contracts 
are  proved  by  showing  that  the  terms  are  inferred  as 
a  matter  of  fact  from  the  evidence  offered  of  the  cir- 
cumstances surrounding  the  parties,  making  it  reason- 
able that  a  contract  existed  between  them  by  tacit  un- 
derstanding. In  such  cases  no  fictions  are  or  can  be 
indulged.  The  evidence  must  satisfy  the  court  and 
jury  that  the  parties  understood  that  each  sustained 
to  the  other  a  contractual  relation,  and  that,  by  reason 
of  this  relation,  the  defendant  is  indebted  to  the  plain- 
tiff for  services  performed. ' ' 

Judgment  was  given  for  the  Columbus  Railway 
Company,  because  the  evidence  offered  by  Gaffney 
failed  to  show  that  any  such  relation  existed  between 
them  during  the  time  that  he  was  performing  the 
services  in  question. 

RXJIiING  LAW 
Story  Case  Answer 

It  has  just  been  stated  that  an  express  contract  is 
one  in  which  all  the  terms  of  the  contract  are  ex- 
pressly agreed  upon.  However,  one  or  more  terms  of 
the  contract  may  be  contingent  upon  some  future 
event,  although  that  alone  does  not  make  it  any  the  less 
express  in  nature. 

An  implied  contract  differs  from  an  express  con- 
tract only  in  the  mode  of  proof.  In  an  implied  con- 
tract there  must  have  been  mutual  assent  on  the  part 
of  both  contracting  parties,  although  that  mutual  as- 
sent may  not  have  been  expressed  in  words.  Suppose 
that  I  should  walk  into  a  grocery  store  where  I  have 
marketed  many  times  before ;  I  see  a  basket  of  peaches 
that  pleases  me ;  I  pick  it  up  and  remark  to  the  grocer, 


CONTRACTS  27 

**I  will  take  these  with  me."  Although  apparently 
no  contract  is  made,  it  is  evident  that  I  intend  to  pay 
for  them ;  and  certainly  he  expects  to  receive  payment. 
In  such  a  case,  a  contract  will  be  implied  in  fact. 

Whether  or  not  in  a  given  case  a  contract  is  to  be 
implied  depends  upon  the  particular  facts  of  each  case. 
It  is  a  question  for  the  jury  to  decide.  In  many  cases 
the  relationship  between  the  parties  is  such  that  it 
tends  to  show  that  there  was  no  intention  to  con- 
tract. Thus,  in  the  Story  Case,  it  is  evident  that  Dr. 
Jones'  brother  was  quite  unaware  that  he  would  be 
charged  for  the  services  rendered.  Since  Dr.  Jones 
was  the  guest  of  a  brother,  it  is  fair  to  conclude  that 
he  had  no  such  intention  at  the  time  he  did  the  work. 
It  is  very  probable  that  he  would  be  unable  to  collect 
from  his  brother  for  his  services.  Had  Dr.  Jones  been 
paying  board  and  room  expenses  while  living  with  his 
brother,  so  that  there  was  the  relationship  of  business 
between  them,  or  had  he  gone  out  from  the  city  at 
great  expense,  it  could  readily  be  implied  that  his 
brother  did  not  expect  him  to  work  gratuitiously  and 
therefore  an  implied  contract  would  exist. 


C.     Contracts  May  Be  Executed  or  Executory 

(1.)     Contracts  Executed  in  Part 

STOEY  CASE 

Mr.  Milton  Jenkins  secured  a  painter  to  paint  his 
house.  He  promised  to  pay  him  $125  for  the  work 
and  material  when  completed.  The  painter  proceeded 
to  do  the  work.  When  he  had  finished  and  applied  to 
Mr.  Jenkins  for  his  pay,  it  was  refused.  Suit  was 
brought  by  the  painter  therefor. 


28  CONTRACTS 

Should  lie  recover  in  the  above  case  1  Is  the  contract 
executed  or  executory,  or  executed  in  part  ? 

EULING  COUBT  CASE 

Brumfel  vs.  Vigo  Agricultural  Society,  Volume  102 
Indiana  Reports,  Page  146 ;  Volume  52  American  Re- 
ports, Page  647. 

The  Vigo  Agricultural  Society  was  an  association, 
organized  under  the  laws  of  the  state  of  Indiana  for 
the  purpose  of  conducting  fairs  for  the  exhibition  of 
agricultural  products,  manufactured  articles  and  other 
things.  During  the  summer,  prior  to  the  time  when  a 
fair  was  to  be  given,  the  Society  issued  generally  ad- 
vertisements, inviting  and  requesting  persons  to  place 
articles  on  exhibition.  In  these  advertisements  it  was 
promised  that  all  articles  placed  on  exhibition  would 
be  properly  cared  for  and  that  the  fair  grounds  would 
be  efficiently  policed  at  all  times. 

Brumfel  sent  in  a  certain  gun  for  exhibition.  Dur- 
ing the  continuance  of  the  fair  it  was  stolen.  It  seems 
that  the  Society  had  been  very  negligent  in  guarding 
all  the  buildings,  and  that  the  building  in  which  this 
gun  was  placed  was  never  fastened  and  never  policed. 

Brumfel  brought  this  action  for  damages.  He 
claimed  that,  having  the  gun  on  exhibition  in  compli- 
ance with  the  request  of  the  Society,  that  the  latter 
assumed  a  contractual  duty  to  properly  care  for  it; 
and,  having  failed  to  do  so,  the  Society  is  liable  for  the 
loss  thereof. 

Decision :  The  advertisement  of  the  Society  was  an 
offer  to  any  one  who  wished  to  place  property  on  exhi- 
bition. In  connection  with  this  offer,  a  promise  was 
made  that  such  property  would  be  safe,  that  it  would 
be  protected.    An  acceptance  of  this  offer  by  Brumfel 


CONTRACTS  29 

made  a  binding  contract.  His  act  of  sending  his  gun 
to  the  Society  constituted  an  acceptance. 

This  was  a  contract  executed  in  part  and  executory 
in  part.  That  part  to  be  done  by  Brumfel  was  done 
when  he  sent  his  gun  to  the  building  of  the  Society. 
That  part  which  was  to  be  done  by  the  Society  was 
not  done.  The  contract  contemplated  its  caring  for  the 
gun  mitil  the  fair  was  over  and,  having  failed  in  doing 
so,  it  is  liable  for  the  damages  resulting  from  its  breach 
of  contract. 

Judgment  was  given  for  Brumfel. 

RUIiING  LAW 
Story  Case  Answer 

An  executed  contract  is  one  wherein  all  obligations 
imposed  or  assumed  by  the  contract  have  been  per- 
formed. Nothing  more  remains  to  be  done.  If  I  agree 
to  buy  your  horse  for  $100  and  you  agree  to  accept 
that  amount,  the  moment  I  pay  the  $100  and  receive 
the  horse  the  contract  is  then  executed. 

A  contract  may  be  executed  in  part  and  executory 
in  part.  Such  a  contract  is  one  in  which  the  obliga- 
tions of  the  contract  have  been  performed  in  part  or 
whole  by  one,  but  have  not  been  performed  in  part  or 
whole  by  the  other.  In  the  above  case,  had  I  paid  the 
$100  to  you,  and  you  in  return  had  promised  to  sell 
me  your  horse  ten  days  later,  the  contract  would  be 
executed  as  to  me,  but  executory  as  to  you. 

This  is  the  situation  in  the  Story  Case.  The  contract 
vas  executed  as  far  as  the  painter  was  concerned  but 
executory  as  to  Mr.  Jenkins.  Therefore,  the  painter 
can  compel  Jenkins  to  satisfy  his  part  of  the  contract. 


30  CONTRACTS 

(2.)     Executory  Contracts 
STOEY  CASE 

Andrew  Worsley,  a  brick  dealer,  and  Eichard  Crane, 
a  construction  contractor,  entered  into  a  written  con- 
tract by  which  Worsley  agreed  to  sell  Crane  ten  thou- 
sand brick,  and  Crane  promised  to  pay  ten  dollars  a 
thousand  for  the  brick  upon  their  delivery.  Worsley 
further  agreed  to  deliver  the  brick  by  barge  to  Crane 's 
wharf.  After  this  contract  was  agreed  upon,  Worsley 
engaged  Henry  Mack  to  load  five  thousand  brick  on 
each  of  two  barges  and  convey  them  to  Crane's  wharf. 
Instead  of  loading  two  barges.  Mack  attempted  to  de- 
liver all  the  brick  on  one  barge.  He  was  successful 
in  loading  them  but,  in  the  middle  of  the  river,  a  leak 
occurred,  and  the  boat  quidkly  sank  because  of  its 
heavy  load.  Worsley  refused  to  deliver  more  brick 
and  Crane  brought  suit,  not  against  Worsley,  but 
against  Mack,  for  his  negligence  in  causing  the  loss  of 
the  brick.    Can  Crane  recover  in  this  action? 

EXJIiING  COTJET  CASE 

McDonald  vs.  Hewett,  Volume  15  Johnson's  New 
York  Reports,  Page  349;  Volume  8  American  Decis- 
ions, Page  241. 

McDonald  negotiated  with  one  Nelson  for  the  pur- 
chase of  timber.  When  the  terms  were  reached  they 
entered  into  a  written  agreement  for  the  sale  and  pur- 
chase of  timber.  By  this  agreement  Nelson  stated  that 
he  had  sold  to  McDonald  certain  timber,  then  cut  and 
ascertained,  but  as  yet  unmeasured.  McDonald  on  his 
part  agreed  to  pay  for  it,  when  measured  in  New  York, 
at  the  market  price  of  such  timber  at  the  time  it  was 
to  be  weighed.  Nelson  agreed  to  deliver  or  have  it 
delivered  in  New  York  at  a  certain  time  for  the  pur- 


CONTRACTS  31 

pose  of  having  it  measured.  He  engaged  Hewett  to 
convey  the  timber  to  New  York.  When  Hewett  ar- 
rived there  with  the  timber,  instead  of  measuring  it 
and  delivering  it  to  McDonald,  he  measured  and  sold 
it  to  a  third  person. 

McDonald  then  sued  Hewett  for  the  conversion  of 
the  timber.  He  contended  that  the  contract  was  ex- 
ecuted; and  that  the  title  to  the  timber  had  passed  to 
him.  By  the  defendant  it  was  contended  that  the  con- 
tract was  executory  and  that  no  title  passed  until  the 
measuring  had  been  done. 

Decision :  McDonald  has  no  remedy  against  Hewett 
in  this  case;  the  title  to  this  lumber  remained  mth 
Nelson.  The  former  had  a  contract  to  sell,  but  it  was 
an  executory  contract.  The  timber  was  still  to  be 
measured  and  delivered;  and,  until  the  timber  was 
measured,  no  title  passed.  Although  McDonald  has  a 
remedy  against  Nelson,  he  has  no  remedy  against 
Hewett. 

RULING  LAW 
Story  Case  Answer 

Where  persons  enter  into  a  contract,  they  voluntarily 
assume  certain  duties.  These  duties  constitute  the  ob- 
ligation of  the  contract.  So  long  as  these  duties  are 
not  performed  by  the  parties  to  the  contract,  the  con- 
tract is  said  to  remain  executory.  When  the  duties  are 
performed,  it  is  said  to  be  executed  in  that  degree. 
When  all  the  duties  of  a  contract  have  been  performed, 
the  contract  is  no  longer  executory,  but  is  wholly 
executed. 

In  the  Story  Case,  the  contract  was  entirely  execu- 
tory.   Worsley  had  not  complied  with  his  part  in  deliv- 


32  CONTEACTS 

ering  the  brick  to  the  wharf.  Until  that  was  done,  the 
brick  was  still  his  property.  Mack,  therefore  was  not 
conveying  property  belonging  to  Crane  and  owed  no 
duty  to  Crane.  Hence,  Crane  cannot  recover  in  this 
action  against  Mack. 


D.     Contracts  May  Be  Unilateral  or  Bilateral 

(1.)     Unilateral  Contracts 

STOEY  CASE 

The  Monroe  Trust  Company  of  New  York  sent  a 
telegram  to  the  Brewster  Stdck  and  Bond  Company 
of  Boston,  offering  to  buy  one  hundred  shares  of  the 
Pennsylvania  Eailroad  Company  stock,  provided  that 
they  could  be  purchased  at  ninety-eight  dollars  a  share, 
and  provided  delivery  was  made  to  its  agent  in  Bos- 
ton on  the  same  day.  Two  hours  after  the  receipt  of 
this  telegi'am,  the  Brewster  Company  delivered  one 
hundred  shares  to  the  Monroe  Trust  Company's  agent 
at  Boston  and  debited  that  company  for  $9800.  The 
Brewster  Company  never  directly  answered  the  tele- 
gram of  the  Monroe  Trust  Company,  and  considered 
that  the  delivery  of  the  stock  amounted  to  an  accept- 
ance. 

At  the  time  the  stock  was  delivered  to  the  agent  in 
Boston,  it  was  selling  on  the  market  at  ninety-seven 
dollars  a  share,  having  lost  in  value  two  dollars  a  share 
since  the  previous  day.  The  Monroe  Trust  Company 
thereupon  maintained  that  no  contract  ever  existed  be- 
tween itself  and  the  Brewster  Company  to  pay  ninety- 
eight  dollars  a  share  for  the  stock,  since  the  latter  com- 
pany never  expressly  accepted  its  offer  made  in  the 
telegram.  The  trust  company  held  that  the  delivery 
of  the  stock  and  its  acceptance  by  its  agent  amounted 


CONTRACTS  33 

to  a  new  contract  and  its  liability  was  merely  for  the 
market  price.    Is  this  a  correct  contention? 

EUIilNG  COUET  CASE 

Reif  vs.  Paige,  Volume  55  Wisconsin  Reports,  Page 
496 ;  Volume  42  American  Reports,  Page  731. 

A  certain  building  was  burning.  On  the  fourth  floor 
of  the  building  was  the  wife  of  the  defendant,  Paige. 
The  fire  had  made  such  progress  that  it  seemed 
scarcely  possible  that  she  could  be  rescued.  Paige  said 
that  he  would  give  $5,000  to  any  person  who  would 
bring  the  body  of  his  wife  from  the  burning  building, 
whether  dead  or  alive.  Reif  heard  the  offer.  He  en- 
tered the  building  and,  after  a  desperate  struggle,  lo- 
cated the  body  and  brought  it  forth. 

Thereafter  he  demanded  the  $5,000  of  Paige,  who 
refused  to  pay  it.  Thereupon  Reif  brought  tliis  action 
to  recover  the  money  in  question.  The  defendant  con- 
tended that  he  was  not  bound  by  this  because  there 
was  no  consideration  for  his  promise  to  pay  the 
$5,000. 

Decision:  The  offer  of  Paige  in  this  case  was  a 
promise  to  any  one  who  was  willing  to  risk  his  life 
in  the  burning  building  in  an  attempt  to  rescue  the 
body  of  the  w^oman.  Until  the  act  of  rescue  was  done 
the  offer  continued  a  mere  promise,  not  binding  upon 
Paige.  As  soon  as  Reif  did  rescue  the  body,  however, 
his  promise  to  pay  the  money  became  a  binding  prom- 
ise. 

This  was,  therefore,  a  unilateral  contract.  In  ac- 
cordance with  the  offer,  by  an  act,  Reif  had  performed 
or  done  all  that  he  was  required  to  do ;  but  the  promise 


34  CONTRACTS 

of  Paige  still  continues  binding  upon  him,  as  yet  un- 
performed. 

Accordingly,  it  was  held  that  the  plaintiff,  Reif 
might  recover  of  the  defendant,  Paige,  the  $5,000. 

EULING  LAW 
Story  Case  Answer 

An  imilateral  contract  is  one  in  which  there  is  a 
promise  on  one  side  only,  the  consideration  on  the 
other  side  having  already  been  executed.  Such  con- 
tracts are  possible  only  where  the  offer  is  made  under 
such  circumstances  that  it  can  be  accepted  by  an  act, 
and  thereby  be  converted  into  a  binding  obligation. 
This  is  usually  the  nature  of  those  contracts  which  re- 
sult from  the  offer  of  a  reward  for  the  doing  of  an 
act.  For  instance,  if  A  issues  a  statement  offering 
$5  to  the  man  who  will  find  and  return  his  watch, 
B  could  not  accept  the  offer  by  promising  to  find  the 
watch  and  return  it.  It  can  be  accepted  only  by  doing 
the  act.  Only  one  promise  therefore  ever  exists  in  a 
unilateral  contract. 

In  the  Story  Case,  the  offer  of  the  trust  company  was 
so  worded  that  it  could  be  accepted  by  the  performing 
of  an  act — ^namely,  the  delivery  of  the  stock.  There- 
fore, the  trust  company  is  liable  for  the  price  stipu- 
lated. 

Had  the  trust  company  added  in  its  telegram  **wire 
reply",  the  Brewster  Company  could  have  accepted 
only  by  making  a  counter  promise  to  deliver  the  stock. 
The  contention  of  the  trust  company  that  no  contract 
based  on  their  telegram  existed  of  delivery  of  the 
stock  would  have  been  correct,  and  they  would  then 
have  paid  only  the  market  price. 


CONTRACTS  35 

(2.)     Bilateral  Contracts 
STORY  CASE 

Richard  Bates  and  Howard  Sherman  made  a  con- 
tract whereby  Bates  agreed  to  build  a  home  for  Sher- 
man within  four  months  time.  Sherman  agreed  to 
pay  Bates  $2,000  for  the  completed  house.  Four 
days  after  the  work  was  started,  Bates  declared  that 
he  was  about  to  discontinue  the  contract  because  he 
could  not  get  brick  masons  to  work  for  $4  a  day  as 
he  had  planned  to  do  when  he  made  the  contract ;  that 
brick  masons  would  cost  him  $5  a  day  and  he  could 
not  afford  to  pay  this  amount.  Sherman  was  in  haste 
to  have  the  house  completed  within  the  specified  time, 
and  therefore  he  offered  to  pay  one-half  of  the  extra 
cost  of  the  men,  provided  Bates  would  continue  under 
the  original  contract.  Bates  accepted  this  offer,  and 
the  new  understanding  was  put  in  writing. 

When  the  house  was  completed,  Sherman  paid  Bates 
$2,000  and  refused  to  pay  any  more.  Bates  de- 
manded $400  additional,  since  his  brick  masons  had 
cost  him  $800  more  than  he  originally  planned  to 
pay  them,  and  Sherman  had  promised  to  pay  one-half 
of  this  extra  cost.  Sherman  refused  to  pay  this  on 
the  ground  that  there  was  no  counterpromise  from 
Bates  to  set  off  the  promise  made  by  himself.  There- 
fore, a  second  contract  did  not  exist,  although  the  un- 
derstanding was  put  in  writing.  Can  Bates  recover 
this  additional  sum  in  a  law  suit? 

EULING  COURT   CASE 

Howe  VS.  O'Mally,  Volume  1  Murphy's  North  Caro- 
lina Reports,  Page  287 ;  Volume  3  American  Decisions, 
Page  693. 


36  CONTRACTS 

Howe,  by  a  warranty  deed,  conveyed  to  O'Mally  140 
acres  of  land.  This  140  acres  was  a  part  of  a  much 
larger  tract  which  was  o\\Tied  by  Howe.  Two  years 
later,  by  another  deed,  Howe  conveyed  the  remainder 
of  the  tract.  The  deed  recited  that  the  remaining  por- 
tion of  the  tract  contained  about  221  acres.  But  it  was 
stated  in  the  conveyance  that  the  intent  of  the  oTVTier 
was  to  pass  title  to  the  remainder  whether  it  contained 
more  or  less  than  221  acres.  Sometime  later  a  dis- 
pute arose  between  the  parties  as  to  the  number  of 
acres  contained  in  the  last  tract  conveyed.  O'Mally 
contended  that  it  contained  more  than  221  acres.  To 
settle  the  disagreement  they  mutually  agreed  to  have 
the  land  surveyed;  and  if  it  should  be  found  to  con- 
tain more  than  221  acres,  0  'Mally  agreed  to  pay  Howe 
ten  dollars  an  acre  for  the  excess ;  and  if  it  was  found 
to  contain  less  than  221  acres,  Howe  agreed  to  pay 
0  'Mally  ten  dollars  per  acre  for  the  deficiency.  Upon 
the  resurvey,  the  tract  in  question  was  found  to  contain 
87  more  acres  than  the  deed  called  for.  Howe  de- 
manded $870  of  O'Mally;  the  latter  refused  to  pay  it 
and  this  action  was  brought  for  the  recovery  thereof. 

It  was  contended  by  O'Mally  that  no  recovery 
should  be  permitted  because  there  was  no  consider- 
ation for  his  promise  to  pay  ten  dollars  an  acre  for 
the  excess. 

Decision :  Here  are  mutual  promises ;  one  is  made 
the  consideration  of  the  other,  and  we  are  of  opinion, 
that  the  plaintiff's  promise  to  refund  in  the  event  of 
deficiency  in  the  number  of  acres  is  a  good  consider- 
ation to  support  0 'Mally 's  promise  to  pay  should 
there  be  more  than  the  number  of  acres  named  in  his 
deed. 


CONTRACTS  37 

This  was  a  bilateral  contract.  Each  had  promised 
to  do  a  certain  thing  under  certain  circumstances. 
Each  was  bound  to  the  other  and  there  was  an  obliga- 
tion on  the  part  of  each. 

Therefore,  it  was  decided  that  Howe  might  recover 
the  amount  sued  for. 

EUUNG  LAW 
Story  Case  Answer 

A  bilateral  contract  is  one  in  which  there  are  prom- 
ises on  both  sides.  One  promise  is  given  for  another, 
so  that  there  is  something  to  be  done  or  forborne  on 
both  sides,  and  both  sides  are  under  legal  obligation, 
the  one  to  the  other.  If  the  contract  is  not  unilateral, 
that  is,  composed  of  a  promise  and  an  act  done  in  re- 
liance on  that  promise,  it  must  be  bilateral  to  be  en- 
forcible.  A  promise  without  a  counter  promise  is  not 
enforcible. 

In  the  Story  Case,  the  counter  promise  of  Bates  to 
continue  building  if  Sherman  would  pay  one-half  the 
extra  cost  of  the  men  was  in  fact  not  a  real  promise, 
for  he  was  already  under  obligation  to  do  this  very 
thing.  A  promise  to  do  what  one  is  already  bound  to 
do  is  not  a  promise.  Therefore,  a  second  contract  did 
not  exist,  and  Sherman  need  not  pay  one-half  the 
extra  cost. 


II.  THE  FORMATION  OF  A  CONTRACT 

1.     The  Requisites  of  Form 

A.     Oral  Contracts  Are  Generally  Enforcible 

STORY  CASE 

Henry  Davis,  a  private  banker,  said  to  George  Hale, 
one  of  his  salesmen,  ''George,  if  you  will  work  the 


38  CONTEACTS 

balance  of  this  year  on  your  present  salary,  and  sell 
as  many  bonds  during  the  next  six  months  as  you 
have  during  the  past  six  months,  I  will  agree  to  make 
you  a  partner  in  the  business,  giving  you  a  one-fifth 
interest,  and  I  will  also  continue  your  present  salary.  * ' 
Hale  answered  that  this  arrangement  was  satisfactory 
to  him.  He  worked  faithfully  until  the  end  of  the  year, 
and  was  as  successful  in  his  sales  as  he  had  been  dur- 
ing the  first  six  months.  Davis,  however,  refused  to  do 
as  he  had  promised,  and  stated  that  his  promise  was 
not  enforcible  because  it  was  not  in  writing.  Is  this 
correct? 

SXTLINa  C0T7BT  CASE 

Austin  vs.  Foster,  Volume  9  Pickering's  Reports, 
Page  341. 

Austin  was  the  warden  of  a  state  prison.  He  had 
under  his  charge  and  supervision  many  convicts.  Fos- 
ter was  a  cabinet  maker  in  the  same  city  where  the 
prison  was  located.  Being  in  need  of  labor,  he  went 
to  Austin  to  engage  some  convicts  to  do  certain  work 
for  him.  They  came  to  an  agreement  by  which  Foster 
was  to  have  thirty  convicts  for  a  certain  period,  for 
which  he  was  to  pay  a  certain  sum  each  day  for  each 
convict  taken  with  him,  although  none  of  the  terms 
of  their  agreement  were  reduced  to  writing.  In  pur- 
suance of  this  contract,  Foster  took  away  with  him 
thirty  men  who  worked  for  him  about  two  months.  At 
the  end  of  this  time  he  sent  them  back  and  refused 
to  pay  anything  for  their  services. 

In  the  state  of  Massachusetts  there  was  a  statute 
which  provided  that  all  contracts  made  in  reference 
to  the  state  prison  should  be  made  with  the  warden 
and  that  he,  the  warden,  may  sue  and  be  sued  upon 


CONTEACTS  39 

such  contracts.  The  warden,  Austin,  brings  this  ac- 
tion under  the  provisions  of  the  statute,  just  referred 
to,  to  recover  compensation  for  the  use  of  the  con- 
victs during  the  two  months  that  they  were  engaged 
in  working  for  Foster.  Foster  maintained  that  no 
action  could  be  brought,  because  the  contract  was  not 
in  writing. 

Decision :  At  common  law,  in  the  absence  of  a  stat- 
ute providing  a  contrary  form,  no  contract  need  be 
in  writing.  Contracts  made  by  word  of  mouth  were 
as  binding  as  contracts  made  in  writing.  This  statute, 
which  gave  to  the  warden  of  the  state  prison  the  right 
and  power  to  contract  in  reference  to  the  state  prison, 
did  not  say  that  such  contracts  should  be  in  writing. 
The  result  is  that  the  common  law  rule  still  prevails 
in  such  a  case.  Therefore,  the  contract  is  binding,  even 
though  it  is  not  in  writing. 

It  was,  therefore,  held  that  the  plaintiff,  Austin, 
might  recover  the  amount  due  for  the  services  of  the 
convicts. 

RXTIilNa  LAW 
Story  Case  Answer 

For  the  most  part,  an  oral  contract  is  just  as  valid 
and  as  a  contract  in  writing.  There  are  a  few  par- 
ticular contracts,  which  as  will  be  seen  later,  must  be 
put  in  writing  in  order  that  they  may  be  enforced  in 
courts.  AVith  these  few  exceptions,  however,  contracts 
by  the  common  law  were  not  required  to  be  reduced 
to  writing.  But  an  oral  contract  is  often  very  difficult 
to  prove,  and  for  that  reason,  all  contracts  should  be 
reduced  to  writing. 

In  the  Story  Case,  if  no  one  were  present,  except  the 
two  persons,  when  Davis  made  his  promise  to  Hale,  the 


40  CONTRACTS 

latter  might  have  difficulty  in  proving  the  contract,  if 
Davis  denied  absolutely  its  existence.  An  oral  con- 
tract, however,  is  good,  and  is  binding  on  Davis.  If 
he  does  not  deny  its  existence  and  makes  as  defense 
merely  the  lack  of  writing.  Hale  can  coUect  from  him 
for  breach  of  contract. 


B.     Contracts  May  Be  in  Writing 

(1.)     A  Written  Contract  May  Be  Stipulated 

STORY  CASE 

Amos  Hendy,  an  accountant,  signed  a  contract  to 
work  for  the  Northern  Securities  Company  for  one 
year  at  two  hundred  dollars  a  month.  In  this  con- 
tract, which  was  also  signed  by  the  company,  there 
was  a  clause  stipulating  that  the  company  would  not 
make  extra  payment  for  work  done  at  night  or  on  holi- 
days, unless  there  was  a  written  agreement  between 
the  president  of  the  company  and  the  employees  con- 
cerning the  extra  remuneration. 

After  he  had  been  engaged  in  his  duties  two  months, 
the  secretary  asked  Hendy  to  work  for  ten  nights  dur- 
ing a  period  of  unusually  heavy  work,  and  promised 
that  the  company  should  pay  him  an  additional  sum 
for  this  extra  labor.  Later,  the  company  refused  to 
pay  for  this  work  on  the  ground  that  no  agreement  was 
made  in  writing  and  signed  by  the  president.  Can 
Hendy  compel  payment! 

RULING  COURT  CASE 

Gotch  vs,  Ahhott,  Volume  13  Maryland,  Reports, 
Page  314 ;  Volume  21  American  Decisions,  Page  635. 

Gotch,  the  plaintiff  in  this  action,  contracted  with 
Abbott  to  erect  a  mill  for  him.     He  guaranteed  to 


CONTEACTS  41 

erect  a  mill  with  the  necessary  boilers,  elevators,  and 
rubber,  that  would  grind  the  best  wheat  flour.  Abbot, 
on  his  part,  promised  to  pay  him  five  thousand  dollars 
for  the  work  when  completed.  In  the  contract  there 
appeared  this  agreement;  **No  extra  charges  to  be 
made  unless  a  written  agreement  be  made  and  attached 
to  this  contract."  During  the  course  of  construction, 
Gotch  put  in  much  extra  work  in  erecting  the  mill. 
Abbott  was  aware  of  the  extra  work,  but  nothing  was 
said  to  him  concerning  any  compensation  therefor  and 
no  written  agreement  was  made  by  them  in  reference 
therefor.  "When  Gotch  had  finished  the  mill  he  claimed 
$400  for  extra  work  necessary  in  the  erection  of  the 
building  and  not  provided  for  in  the  original  contract. 
Abbott  refused  to  pay  the  sum  demanded,  and  suit 
was  brought  for  it.  Abbott  contended  that  he  could 
not  be  held  liable  for  that  amount  as  extra  charges, 
because  their  contract  provided  that  extra  charges 
could  be  made  only  when  provided  for  in  a  written 
agreement  to  be  attached  to  the  original  contract. 

Decision:  Although,  as  a  general  rule,  a  contract 
is  not  required  to  be  in  writing,  the  parties  may  stipu- 
late that  a  given  contract,  or  a  portion  thereof,  shall 
be  reduced  to  writing.  If  they  do  enter  into  such  an 
agreement,  the  agreement  is  binding  unless  both  par- 
ties agree  to  rescind  the  same.  In  this  case,  by  their 
original  contract,  it  was  expressly  agreed  that  Gotch 
was  to  receive  no  extra  charges  for  additional  labor  or 
material,  unless  there  was  an  agreement  made  in  writ- 
ing and  attached  to  the  original  contract.  It  did  not 
appear  that  they  had  waived  such  an  agreement  and 
there  was  no  written  contract  for  the  extra  charges 
claimed  by  Gotch.  Therefore,  the  court  held  that  Gotch 
could  not  recover. 


42  CONTRACTS 

RULING  LAW 
Story  Case  Answer 

Although,  most  contracts  may  be  oral,  nevertheless, 
parties  may  and  often  do,  stipulate  that  certain  con- 
tracts must  be  in  writing  in  order  to  be  binding. 
Where  the  parties  have  so  agreed,  obviously  such  an 
agreement  will  be  binding  upon  them.  But  they  may 
at  any  time  waive  the  contract  and  consent  to  an  oral 
agreement.  The  obligation  to  reduce  their  contracts 
to  writing  is  binding  only  so  long  as  both  wish.  As 
they  may  voluntarily  agree  upon  such  a  formality, 
they  may  likewise  agree  to  dispense  with  it. 

In  the  Story  Case,  Henry  cannot  compel  payment  of 
the  extra  remuneration  because  he  had  previously 
bound  himself  not  to  expect  or  demand  any  extra  com- 
pensation, unless  he  possessed  a  written  contract. 


(2.)     No  Particular  Form  Is  Necessary 
STORY  CASE 

Thomas  Malley  brought  suit  against  Edward  Baird 
upon  the  following  document  which  Malley  claimed 
was  a  contract. 

*' Agreed  that  I  will  sell  Baird  my  two  white 
horses  for  $150  each. 

Thomas  Malley 
Edward  Baird." 
Malley 's  suit  was  brought  for  breach  of  a  written 
contract  when  Baird  failed  to  purchase  the  horses  and 
render  the  $300  payment.  Baird  admitted  that  he 
had  signed  the  paper,  but  maintained  that  it  contained 
no  promise  made  by  him  and,  furthermore,  was  not  in 
the  form  of  a  good  contract.  Is  this  an  effective  de- 
fense? 


CONTRACTS  43 

EULINQ  COUBT   CASE 

Shephard  vs.  Carpenter,  Volume  54  Minnesota  Re- 
ports, Page  123;  Volume  55  Northwestern  Reporter, 
Page  906. 

Shephard  and  Carpenter  made  out  a  writing,  agree- 
ing to  enter  into,  at  some  future  time,  a  written  con- 
tract, by  which  Shephard  was  to  cut  and  haul  timber 
for  Carpenter.  The  writing,  as  they  made  it  out,  did 
not  state  when  the  final  contract  was  to  be  formulated. 
It  did  not  specify  the  amount  of  timber  to  be  cut,  nor 
the  place  where  it  was  to  be  delivered,  nor  any  terms 
which  related  to  the  price  for  the  cutting  and  haulmg. 

When  Shephard  thereafter  demanded  that  Carpen- 
ter fulfill  the  terms  of  the  contract  agreed  upon,  he 
refused  to  act.  Thereupon,  this  action  was  brought 
by  Shephard  for  damages.  Carpenter  contended  that 
the  writing  which  they  drew  up  was  not  binding  upon 
him  because  it  was  not  sufficient  to  constitute  a  bind- 
ing contract. 

Decision:  No  particular  form  of  writing  is  neces- 
sary to  constitute  a  written  contract.  A  written  con- 
tract between  two  persons,  upon  a  valid  consideration, 
that  they  will  at  some  specified  time  in  the  future,  at 
the  election  of  one  of  them,  enter  into  a  particular  con- 
tract, specifying  its  terms,  is  undoubtedly  binding  and, 
upon  a  breach  thereof,  the  party  having  the  option, 
may  sue  for  loss  caused  by  the  failure  of  the  other 
party  to  carry  out  the  agreement.  But  an  agreement 
that  they  will  in  the  future  make  such  contract  as  they 
may  then  agree  upon  amounts  to  nothing.  The  agree- 
ment must  contain  the  essential  terms  of  the  contract, 
clearly  stated,  otherwise  there  is  no  written  contract, 
for  the  court  does  not  know  what  to  enforce.    The  al- 


44  CONTRACTS 

leged  agreement  was  not  incorrect  as  to  form  but  does 
not  state  any  enforcible  promise. 

Accordingly,  it  was  held  that  judgment  should  be 
given  for  Carpenter,  the  defendant. 

EUIiING  LAW 
Story  Case  Answer 

Where  parties  choose  to  reduce  contracts  to  writing, 
no  particular  form  is  necessary.  However,  they  must 
clearly  state  in  the  writing  all  the  essential  terms  of 
their  agreement,  else  they  have  not  a  written  contract. 

If  the  parties  agree  in  advance  that  any  contract 
between  them  must  be  in  writing,  they  will  be  bound  to 
put  their  contracts  in  such  form  as  they  have  agreed 
upon.  If  they  have  agreed  upon  no  form,  no  particular 
form  is  necessary. 

In  the  Story  Case,  the  paper  signed  by  Malley  and 
Baird  contains  sufficient  to  show  the  terms  of  a  con- 
tract existing  between  them.  It  is  not  necessary  that 
the  promise  by  Baird  be  in  any  certain  form.  It  is 
necessary  only  that  the  writing  show  the  intention  of 
the  parties.    Baird 's  defense,  therefore,  is  not  good. 


(3.)     An  Agreement  May  Be  Partly  in  Writing  and 
Partly  Oral 
STOKY  CASE 

George  Jackson,  in  a  letter  to  Henry  Owens,  offered 
to  work  for  him  as  an  accountant  for  six  months,  pro- 
vided Owen  desired  his  services.  Nothing  was  stated 
in  the  letter  concerning  his  salary.  Two  days  after  the 
letter  was  sent  Jackson  made  a  personal  call  on  Owens, 
who  then  stated  to  him,  *'A11  right,  George,  I'll  have 


CONTRACTS  45 

yon  begin  work  next  week."  This  was  all  that  was 
said  on  this  subject  at  that  time.  On  Monday  of  the 
following  week,  when  Jackson  offered  his  services,  he 
was  informed  by  Owens  that  his  services  were  not 
needed.  Thereupon  Jackson  brought  suit  for  damages 
and  breach  of  contract.    Can  he  recover  ? 

EULINa  COITRT  CASE 

Gordon  vs.  Gordon,  Volume  96  Indiana  Reports, 
Page  134. 

The  plaintiff  and  defendant  were  brothers.  Their 
mother  owned  a  farm.  The  defendant,  who  had  charge 
of  the  farm,  leased  it  in  writing  to  the  plaintiff.  By 
the  terms  of  the  lease  the  defendant  was  to  receive  one 
half  of  the  corn  raised  upon  the  farm.  He,  in  return, 
agreed  to  pay  his  brother  for  all  necessary  repairs 
made  on  the  farm  and  for  boarding  and  caring  for 
their  mother. 

The  plaintiff  after  a  time  refused  to  proceed  with  the 
contract  and  sued  for  the  support  of  the  mother  and 
for  the  money  he  had  expended  in  making  necessary 
repairs. 

To  this  action,  the  defendant  contended  as  a  defense 
that  the  written  agreement  contained  nothing  as  to 
how  long  the  contract  should  exist,  the  kind  and  extent 
of  the  repairs  that  might  be  made,  the  compensation  to 
be  paid  therefor,  and  the  compensation  to  be  paid  for 
the  care  and  the  support  of  the  mother. 

Decision :  The  contract  was  not  complete  as  a  writ- 
ten contract ;  the  contract  between  the  parties  here  was 
partly  in  writing  and  partly  oral.  This  is  treated  as 
an  oral  contract.  So  far  as  the  duty  to  work  the  farm, 
make  the  repairs,  and  support  the  mother  was  con- 


46  CONTRACTS 

cerned,  the  terms  of  their  agreement  were  in  writing 
but  the  manner  of  repairs,  the  manner  of  supporting 
the  mother,  the  amount  of  compensation  for  repairs 
on  the  farm  and  for  the  support  of  the  mother,  were 
terms  which  were  not  in  writing  but  which  the  parties 
had  orally  agreed  upon. 

The  decision  held  that  the  plaintiff  might  recover 
on  this  contract  although  all  the  terms  of  it  were  not  in 
writing. 

RULING  LAW 
Story  Case  Answer 

In  the  absence  of  a  statute  requirement  that  a  given 
contract  shall  be  in  writing,  the  agreement  may  be 
partly  in  writing  and  partly  oral.  A  person  may  agree 
in  writing  to  work  for  another  for  six  months  from 
that  time,  and  the  other  person  may  orally  agree  to 
pay  him  a  certain  compensation  therefor.  Such  an 
agreement  is  partly  in  writing  and  partly  oral,  never- 
theless it  is  binding  upon  both  of  them.  It  is  always 
better,  however,  to  put  into  the  writing  every  essen- 
tial term  of  the  agreement,  or  else  to  have  no  writing 
whatsoever.  In  the  Story  Case,  a  good  contract  ex- 
isted between  Jackson  and  Owens  consisting  of  the  let- 
ter to  Jackson,  which  became  a  binding  promise  when 
Owens  made  his  oral  acceptance.  Although  no  salary 
was  stipulated,  the  court  would  infer  that  a  reasonable 
wage  was  intended,  depending  upon  custom,  Jackson's 
ability  and  his  prior  wage.  Jackson  could  recover  in 
damages  not  the  entire  wage  for  six  months,  but  the 
difference  between  what  he  could  earn  in  like  employ- 
ment elsewhere,  and  this  wage  which  Owens  agreed  to 
pay. 


CONTRACTS  47 

(4.)     A  Written  Contract  Need  Not  Be  Signed 
STORY  CASE 

Prior  to  January,  1914,  John  Herman  and  James 
Malaney  were  negotiating  with  reference  to  the  trade 
of  Herman's  automobile  for  a  piano  belonging  to  Ma- 
laney. During  the  last  week  of  December,  1914,  they 
had  orally  agreed  upon  terms.  On  the  last  day  of 
the  year,  however,  Herman  said  he  was  dissatisfied 
and  negotiations  were  renewed.  Finally,  on  January 
2nd,  terms  were  agreed  upon  and  put  in  writing,  but 
this  writing  was  not  signed  by  either  party.  It  was 
agreed  that  the  trade  should  be  effective  on  January 
10th.  When  that  day  came,  Malaney  refused  to  deliver 
the  piano  on  the  basis  outlined  in  the  writing,  and  de- 
manded the  terms  originally  laid  down.  Herman 
brought  suit  upon  the  writing,  claiming  that  it  was  a 
written  contract  entered  into  by  the  parties,  and  there- 
fore the  oral  terms  originally  stipulated  could  not  be 
shown.  Malaney  maintained  that  this  was  not  a  writ- 
ten contract  and,  therefore,  the  entire  negotiation 
could  be  put  in  evidence  to  show  what  the  contract 
actually  was.  Which  of  the  contending  parties  is 
correct ! 

EULINO  COUET  CASE 

Bracklin  vs.  Waggerman,  Volume  52  Illinois  Re- 
ports, Page  468. 

Bracklin,  a  building  contractor,  drew  up  a  formal 
contract  purporting  to  be  between  himself  and  Wag- 
german, by  the  terms  of  which  Bracklin  was  to  erect 
a  building  for  Waggerman.  Before  this,  however, 
Bracklin  had  furnished  to  Waggerman  all  the  esti- 
mates for  the  erection  of  the  building.    After  Bracklin 


48  CONTEACTS 

had  prepared  the  agreement  in  writing,  he  signed  it 
and  delivered  the  same  to  Waggerman.  The  latter 
took  the  written  agreement  and  made  many  numerous 
and  material  changes  therein,  but  never  signed  the 
same. 

Bracklin  began  work  on  the  building  and,  at  that 
time,  Waggerman  told  him  that  the  estimates  which 
had  been  furnished  would  govern  lq  the  construction  of 
the  building. 

After  Bracklin  had  finished  the  building,  a  disagree- 
ment arose  between  them  as  to  the  compensation  to  be 
paid  therefor.  Bracklin  brought  this  action  to  recover 
what  he  understood  was  due  him  under  their  agree- 
ment. Waggerman  then  showed  the  written  agree- 
ment, containing  his  alterations,  but  which  was  never 
signed  by  him.  Bracldin  argued  that  this  agreement 
was  not  binding  because  it  was  never  signed  by 
Waggerman. 

Decision :  This  contract,  as  drawn  up  by  Bracklin, 
showed  on  its  face  that  it  was  to  be  signed  by  both 
parties.  It  showed  that  it  was  not  to  be  binding  upon 
either  until  signed  by  both.  As  a  general  rule,  it  is 
not  essential  that  a  written  contract  should  be  signed 
by  the  parties.  But  if  there  is  something  which  shows 
that  they  intended  that  it  should  be  signed,  it  does  not 
become  a  written  contract  until  it  is  so  signed.  The 
estimates  first  furnished  to  Waggerman  govern, 
rather  than  this  unsigned  agreement,  because  the 
contract  consists  of  the  estimates  furnished  by  Brack- 
lin and  their  oral  acceptance  by  Waggerman  when  he 
said  that  these  would  govern  in  the  construction  of  the 
building. 


CONTRACTS  49 

Accordingly,  it  was  held  that  Bracklin  could  recover 
upon  their  oral  agreement,  and  that  he  was  not  bound 
by  the  unsigned  written  agreement. 

EULINa  LAW 
Story  Case  Answer 

Where  persons  reduce  their  contracts  to  writing,  it 
may  be  stated  as  a  general  rule  that  such  an  agreement 
need  not  be  signed.  But  if  it  appears  from  the  agree- 
ment that  it  w^as  contemplated  that  the  agreement 
should  be  signed  before  it  became  binding  upon  either, 
obviously  it  must  be  signed. 

In  the  Story  Case,  Herman  properly  brought  suit 
upon  a  written  contract.  Although  the  parties  did  not 
sign  the  document,  it  was  evident  from  the  docu- 
ment itself  that  this  writing  included  all  the  terms, 
and  was  meant  to  be  the  contract.  Malaney  cannot  in- 
troduce the  prior  negotiations. 


(5.)     Agreement  Signed  by  One  Party  and  Acted  on  by 

the  Other  Is  a  Binding  Contract 

STORY  CASE 

The  Southern  Construction  Company  acquired  a  con- 
tract to  do  certain  street  paving  in  the  town  of  Mem- 
pliis,  Tennessee.  Therefor  the  Illinois  Paving  Brick 
Company  sent  the  construction  company  a  printed  of- 
fer stating  terms  upon  which  brick  would  be  furnished 
for  this  work.  The  terms  were  agreeable  to  the  Con- 
struction Company  and  it  returned  the  document 
properly  signed  to  the  brick  company.  This  company 
did  not  send  any  signed  contract  to  the  construction 
company,  but  immediately  prepared  to  deliver  brick. 


50  CONTRACTS 

A  car  was  loaded  and  a  bill  of  lading  for  the  car  was 
forwarded  by  the  railroad  company  to  the  construc- 
tion company.  The  latter  refused  to  take  the  bill  of 
lading  and  telegraphed  to  the  brick  company  that  ne- 
gotiations were  at  an  end,  since  it  had  never  signed  any 
contract  or  sent  any  acceptance  to  the  construction 
company.  The  brick  company  started  a  law  suit  for 
damages  on  a  breach  of  a  written  contract.  Can  it 
recover? 

RULING  COURT  CASE 

Pekoe  vs.  Vogel,  Volume  157  Illinois  Reports,  Page 
339;  Volume  30  Lawyer's  Reports  Annotated,  Page 
491. 

Pekoe  was  a  cooper  employed  by  Vogel,  the  defend- 
ant, to  do  certain  work  for  him.  The  terms  of  their 
agreement  were  made  in  writing.  One  term  of  the 
contract  was  that  Pekoe  should  not  be  permitted  to 
leave  the  employment  of  Vogel  without  first  giving  ten 
days'  notice  of  his  intention. 

Pekoe  entered  upon  the  performance  of  the  duties 
under  the  agreement.  Vogel  accepted  the  work  which 
he  did  and  made  compensation  to  him  in  accordance 
with  the  terms  of  their  agreement.  After  Pekoe  had 
worked  a  while  for  Vogel,  he  left  without  giving  any 
notice  whatsoever.  He  demanded  of  Vogel  the  amount 
of  compensation  due  him  at  the  time  he  left.  This 
Vogel  refused  to  give,  because  Pekoe  had  broken  his 
agreement.  Pekoe  then  sued  for  the  recovery  of  this 
amount.  Vogel  contended,  in  defense,  that  he  could 
not  recover  because  their  agreement  provided,  in  case 
he  should  leave  without  giving  the  notice,  that  Vogel 
might  retain  twenty-five  dollars  as  damages.    Pekoe,  in 


CONTKACTS  51 

answer  to  this,  said  that  the  agreement  was  not  bind- 
ing, because  it  was  signed  by  him  only,  and  that  Vogel 
had  never  signed  it. 

Decision ;  When  parties  enter  into  a  written  agree- 
ment, which  they  intend  to  sign,  if  one  of  the  parties 
thereto,  who  does  not  sign,  treats  the  contract  as  in  ex- 
istence and  acts  upon  the  same,  it  becomes  a  binding 
contract.  Although  it  was  signed  by  Pekoe,  but  not 
by  Vogel,  the  latter  had  recognized  the  existence  of  the 
contract  by  accepting  and  paying  for  the  work  done 
by  Pekoe.  His  acceptance  and  recognition  of  this  con- 
tract, although  unsigned  by  him,  was  equivalent  to  a 
formal  execution  thereof. 

It  was  therefore  decided  that  the  contract  was  none 
the  less  binding  upon  Pekoe  because  it  was  xmsigned 
by  Vogel. 

RXJUNG  LAW 
Story  Case  Answer 

When  the  parties  have  agreed  to  reduce  their  agree- 
ment to  writing,  and  contemplate  that  it  shall  be 
signed  by  both,  if  one  signs  and  the  other  begins  to  act 
under  the  contract,  it  is  a  written  contract,  even  though 
he  may  not  have  signed  the  same.  His  conduct,  and  his 
recognition  of  the  existence  of  the  binding  force  of  the 
contract,  is  regarded  as  equivalent  to  his  signature 
thereto.  In  the  Story  Case,  the  brick  company  can  re- 
cover on  the  breach  of  a  written  contract  with  the  con- 
struction company.  Had  the  construction  company 
stipulated  that  the  brick  company  should  send  a  signed 
contract,  the  agreement  would  not  have  been  perfected 
imtil  that  was  done.  As  the  case  stands,  a  contract  ex- 
isted, based  on  the  document  signed  and  returned  by 
the  construction  company. 


52  CONTEACTS 

C.     Contracts  Required  to  Be  in  Writing  Under  the 

Statute  of  Frauds 

(1.)     Contracts  Within  One  Division  of  the  Statute 

STOBY  CASE 

Harry,  the  adult  son  of  Mr.  John  Campbell  wished 
to  buy  an  airsliip,  but  was  not  possessed  of  sufficient 
funds.  The  American  Airship  Company  refused  to 
sell  him  a  machine  on  credit  imless  he  would  give 
ample  security.  Harry  persuaded  his  father  to  agree 
orally  with  the  company  to  pay  for  the  airship,  in  case 
of  his  son's  failure  to  settle.  Relying  on  this  promise 
of  Mr.  John  Campbell,  the  Airship  Company  delivered 
the  machine  to  Harry.  Upon  the  day  set  for  payment, 
Harry  informed  the  company  that  he  was  unable  to 
settle.  Mr.  Jolin  Campbell  also  refused  to  satisfy  the 
obligation.  Whereupon  the  American  Airship  Com- 
pany sued  Mr.  John  Campbell  for  the  price  of  the  ma- 
chine delivered  to  his  son. 

Mr.  Campbell  pleaded  as  a  d-efense  that  section  of 
the  Statute  of  Frauds  which  stipulates  that  "no  action 
shall  be  brought  whereby  to  charge  the  defendant  upon 
a  promise  to  answer  for  the  debt  or  default  of  another 
unless  the  agreement  shall  be  in  writing.'* 

May  the  Airsliip  Company  recover  I 

EXTLING  COUET  CASE 

Nugent  vs.  Wolfe,  Volume  111  Pennsylvania  State 
Reports,  Page  471;  Volume  56  American  Reports, 
Page  291.    ^ 

The  First  National  Bank  of  Ravenna  had  recovered 
a  judgment  against  Powers  and  Company.  In  order  to 
prevent  an  execution  being  issued  against  the  property 
of  Powers  and  Company,  Wolfe,  a  stockholder,  orally 


CONTRACTS  53 

promised  Nugent,  the  plaintiff,  that  he  would  save  him 
from  any  damage  if  he  would  assume  the  judgment 
against  Powers  and  Company.  Nugent  did  assume  the 
judgment.  Thereafter,  Powers  and  Company  became 
insolvent  and  Nugent  was  compelled  to  fulfill  his  agree- 
ment. He  then  sued  Wolfe  upon  his  oral  promise  to  in- 
demnify him. 

In  defense  to  this  action,  "Wolfe  contended  that  por- 
tion of  the  Statute  of  Frauds  which  provides:  *'No 
action  shall  be  brought  whereby  to  charge  the  defend- 
ant upon  any  special  promise  to  answer  for  the  debt  or 
default  of  another,  unless  the  agreement  upon  which 
such  action  shall  be  brought,  or  some  memorandum  or 
note  thereof,  shall  be  in  writing  and  signed  by  the 
party  to  be  charged  therewith. ' ' 

Decision:  The  undertaking  of  Wolfe  was  to  see 
that  the  debt  of  Powers  and  Company  was  paid, 
in  case  Powers  and  Company  could  not  pay  it.  This 
was  an  agreement  within  the  section  of  the  Statute  of 
Frauds  above  recited.  Since  tliis  agreement  was  not 
in  writing,  and  since  there  was  no  memorandum  or 
note  thereof,  signed  by  the  party  to  be  charged  there- 
with, no  action  can  be  brought  on  such  an  agreement. 

Mr.  Justice  Sterrett  said  in  part:  "If  one  say  to 
another,  *  deliver  goods  to  A,  I  wiU  pay  you,  *  the  verbal 
promise  is  binding  because  A,  though  he  received  the 
goods  is  not  responsible  to  the  party  who  furnished 
them.  But,  if,  instead  of  saying,  'I  will  pay  you,'  he 
says  *I  will  see  you  paid'  or  *I  will  pay  you  if  he  does 
not '  or  w^ords  equivalent  thereto,  showing  that  the  d^bt 
is  in  the  first  instance  the  debt  of  A,  the  undertaking 
is  collateral  and  not  binding  unless  it  is  in  writing." 


54  CONTRACTS 

Accordingly,  it  was  held  in  this  case  that  Wolfe  was 
not  liable  to  Nugent  upon  this  oral  promise. 

EUUNG  LAW 
Story  Case  Answer 

At  common  law  practically  every  contract  might  be 
oral  and  none  the  less  binding  for  that  reason.  It  was 
found,  however,  that  oral  contracts  caused  great 
trouble  on  account  of  false  swearing.  The  parties  to 
the  agreement  either  forgot  what  they  agreed  upon  or, 
knowing  that  there  was  no  written  evidence  of  their 
contract,  would  wilfully  swear,  contrary  to  their  agree- 
ment. Because  of  this  state  of  things,  the  Statute  of 
Frauds  was  passed  by  the  English  Parliament  in  1677, 
which  required  that  certain  contracts  should  be  re- 
duced to  writing  and  signed  by  the  party  or  parties 
sought  to  be  charged  therewith. 

It  was  provided  that  any  special  promise  to  answer 
for  the  debt,  default  or  miscarriage  of  another  party 
must  be  in  writing,  signed  by  the  party  sought  to  be 
charged  therewith.  Accordingly,  an  agreement  where- 
by one  person  agrees  to  pay  for  the  debt  of  another, 
for  which  the  other  party  is  primarily  liable,  is  not  en- 
forcible  unless  it  is  in  writing  and  signed  by  the  per- 
son assuming  this  obligation.  This  does  not  apply  to 
a  case  where  a  person  agrees  to  be  primarily  liable  for 
the  debt  of  another.  This  distinction  is  clearly  pointed 
out  by  Justice  Sterrett  in  the  Court  Case  of  Nugent 
vs.  Wolfe. 

This  English  Statute  of  Frauds  has  been  incorpor- 
ated substantially  in  similar  statutes  in  all  of  the  states 
of  the  Union. 

In  the  Story  Case,  the  Airship  Company  will  not  be 
allowed  to  recover  the  price  of  the  airship  from  Mr. 


CONTRACTS  55 

Campbell,  because  Mr.  Campbell's  promise  was  not  in 
writing  and  the  Statute  of  Frauds  expressly  states  that 
no  action  shall  be  brought  upon  such  an  oral  promise. 
If  Mr.  Campbell  had  said :  * '  Deliver  the  airship  to  my 
son  and  I  will  pay  you  for  it",  he  would  then  be  bound 
to  pay.  Then  he  would  not  be  answering  for  his  son's 
default.    He  would,  himself,  be  the  obligor. 


(2.)     Contracts  Within  the  Other  Division  of  the 

Statute  of  Frauds 

STOEY  CASE 

Mr.  Deever,  an  old  English  gentleman,  ordered  a 
pair  of  false  teeth  from  a  London  dentist  and  agreed  to 
pay  eleven  pounds  for  them  after  three  months.  The 
dentist  took  his  measurements,  made  the  set,  delivered 
it,  and,  after  three  months,  sued  Mr.  Deever  for  the 
price. 

Mr.  Deever  answered  that  the  Statute  of  Frauds, 
which  says  that  "no  action  shall  be  brought  on  a 
promise  to  pay  for  goods  the  price  of  ten  pounds  or 
more  unless  an  earnest  sum  be  given  to  bind  the  con- 
tract or  the  goods  be  delivered,  or  the  promise  be  in 
writing",  afforded  him  a  good  defense  to  the  action. 

The  dentist  answered:  (1)  That  the  set  of  teeth,  es- 
pecially made  for  Mr.  Deever,  was  not  "goods"  within 
the  meaning  of  the  statute,  and  (2)  That  Mr.  Deever 
had  received  the  teeth.  Is  this  defense  a  good  one? 
Must  Mr.  Deever  pay  for  the  set  of  teeth? 

RULING  COURT  CASE 

Goddard  vs.  Binney,  Volume  115  Massachusetts  Re- 
ports, Page  450;  Volume  15  American  Reports,  Page 
112. 


56  CONTRACTS 

Goddard  was  a  carriage  manufacturer,  engaged  in 
business  in  the  city  of  Boston.  Biiiney  went  to  liim, 
at  his  place  of  business,  and  directed  Goddard  to  make 
for  him  a  buggy.  This  order  Goddard  entered  in  his 
order  book.  Binney  directed  that  the  color  of  the  lin- 
ing should  be  drab.  He  wished  the  seat  to  be  made  of 
cane ;  he  told  him  just  how  he  desired  it  to  be  painted 
and  requested  that  his  monogram  and  initials  be 
placed  on  the  side  of  the  body  of  the  buggy.  Binney 
promised  to  pay  Goddard  $675  for  the  buggy  when 
it  was  completed.  When  Goddard  had  completed  the 
work,  in  accordance  with  the  directions  given  him,  he 
notified  Binney  to  come  after  it.  Binney  refused  to 
take  it ;  this  action  was  brought  for  the  price  thereof. 

In  defense  of  the  action,  Binney  pleaded  that  section 
of  the  Statute  of  Frauds  which  provides:  *'No  con- 
tract for  the  sale  of  personal  property,  for  the  price  of 
fifty  dollars  or  more,  shall  be  valid,  unless  the  buyer 
accepts  and  receives  the  goods,  or  the  contract  be  in 
writing  and  signed  by  the  party  to  be  charged  there- 
with." 

The  plaintiff,  however,  contended  that  this  was  not 
a  contract  for  the  sale  of  personal  property  but  that 
it  was  a  contract  for  work  and  labor  to  be  performed 
by  him  for  Binney  and  therefore  the  agreement  was 
not  within  the  Statute  of  Frauds,  as  contended  by 
Binney. 

Decision;  The  court  was  of  the  opinion  that  this 
was  not  a  contract  for  the  sale  of  personal  property 
but  that  it  was  an  agreement  for  work  and  labor  to  be 
performed  by  Goddard  for  Binney.  Such  being  the 
case,  the  agreement  was  not  within  the  section  of  the 
Statute  of  Frauds  mentioned,  as  contended  by  the  de- 
fendant, Binney. 


CONTEACTS  57 

Mr.  Justice  Ames,  who  delivered  the  opinion  of  the 
court,  said  in  part:  ''A  contract  for  the  sale  of  ar- 
ticles then  existing,  or  such  as  the  vendor  in  the  or- 
dinary course  of  his  business  manufactures  or  pro- 
cures for  the  general  market,  whether  on  hand  at  the 
time  or  not,  is  a  contract  for  the  sale  of  goods  to  which 
the  statute  applies.  But  on  the  other  hand,  if  the 
goods  are  to  be  manufactured  especially  for  the  pur- 
chaser— as  in  this  case — and  upon  his  special  order, 
and  not  for  the  general  market,  the  contract  is  not 
within  the  statute." 

Accordingly,  it  was  held  that  Goddard  might  recover 
the  $675  of  Binney. 

EULINGLAW 
Story  Case  Answer 

The  Statute  of  Frauds,  adopted  in  all  states  provides 
substantially : 

*'No  contract  for  the  sale  of  any  goods,  wares,  or 
merchandise,  for  the  price  of  ten  pounds  sterling,  or 
upwards,  shall  be  allowed  to  be  good,  except  the  buyer 
shall  accept  part  of  the  goods  so  sold,  and  actually  re- 
ceive the  same,  or  give  something  in  earnest  to  bind 
the  bargain,  or  in  part  payment,  or  some  note  or 
memorandum  in  writing  of  the  said  bargain  be  made 
and  signed  by  the  parties  to  be  charged  or  their  agents 
thereunto  authorized." 

The  amoimt  or  purchase  price,  which  will  render  the 
agreement  unenforcible  unless  in  writing,  varies  in  the 
differeni  states.  It  ranges  from  thirty-five  dollars  to 
two  hundred. 

It  is  often  a  difficult  question  to  determine  whether 
a  given  agreement  is  a  contract  of  sale  or  a  contract 
for  work  and  labor.    If  the  agreement  has  to  do  with 


58  CONTEACTS 

goods  then  existing,  or  such  goods  as  a  seller  usnally 
sells,  manufactures  or  procures  for  the  general  mar- 
ket, whether  he  has  them  at  the  time  or  not,  the  agree- 
ment comes  within  this  section  of  the  statute.  But  if 
he  agrees  to  manufacture  goods  especially  for  a  per- 
son, and  not  for  the  general  market,  the  agreement  is 
considered  as  one  for  work  and  labor  and  not  for  the 
sale  of  personal  property,  and  need  not  be  in  writing 
in  order  to  be  enf orcible. 

Thus,  in  the  Story  Case,  a  set  of  teeth  fitted  to  the 
mouth  of  a  single  person  is  considered  as  work  and 
labor  and  not  as  ** goods,  wares,  and  merchandise". 
But  even  considering  the  teeth  as  '  *  goods ' '  Mr.  Deever 
must  pay  for  them;  for  the  statute  applies  only  to 
goods  not  delivered  and  Mr.  Deever  had  received  the 
teeth.  This  fact  takes  the  agreement  out  of  the 
statute.  Therefore,  an  action  may  be  brought  on  the 
agreement. 


(3.)     The  Statute  Requires  the  Writing  to  Be  Signed 

by  the  Party  Under  the  Obligation 

STOKY  CASE 

Mr.  Edwards  signed  the  following  paper  in  consider- 
ation of  the  promise  of  the  Electric  Piano  Company 
to  deliver  an  electric  piano. 

I,  Jonathan  Edwards,  promise  to  pay  ten  dollars 
($10)  to  the  Electric  Piano  Company  in  return  for  the 
promise  of  the  Electric  Piano  Company  to  put  a  piano 
in  my  home  on  June  1st,  and  to  pay  one  dollar  ($1)  a 
week  thereafter  for  two  years  when  title  to  said  piano 
shall  pass  to  me. 

(Signed)  Jonathan  Edwards. 

March  25th. 


CONTRACTS  59 

On  June  1st,  the  Electric  Piano  Company  refused  to 
put  a  piano  in  Mr.  Edwards'  home  and  gave  no  good 
reason  for  the  refusal.  On  June  6th,  Edwards  sued 
the  company  for  breach  of  its  contract  to  deliver  the 
piano  and  offered  to  produce  the  above  writing  for 
proof  of  the  contract.  To  this  the  company  objected, 
for  the  reason  that  the  writing  was  not  signed  by  it. 
The  company  cited  the  Statute  of  Frauds  where  it  is 
stated  *'no  action  shall  be  brought — ^unless  in  writing 
signed  by  the  party  to  be  charged.'* 

Which  party  wins? 

RTTLINa  COITBT  CASE 

Williams  vs.  Robinson,  Volume  73  Maine  Reports, 
Page  186 ;  Volume  40  American  Reports,  Page  352. 

Williams  brings  this  written  action  against  Eobinson 
upon  the  following  written  contract: 

''Augusta,  June  8,  1880. 
I  hereby  agree  to  furnish  M.  F.  Williams  of  New 
Haven,  eight  hundred  to  one  thousand  tons  of  ice,  de- 
livered on  board  vessels  at  Augusta,  Maine,  properly 
packed  for  a  voyage  to  New  Haven,  for  the  sum  of  two 
dollars  per  ton. 

Bond  Bbook  Ice  Company, 
J.  E.  Robinson,  Augusta,  Maine.  *' 

After  having  entered  into  the  foregoing  contract, 
Robinson  failed  and  refused  to  deliver  the  ice  as  he 
had  agreed  to  do.  Thereupon  Williams  brought  this 
action.  By  Robinson  it  was  contended  that  this  was 
not  a  binding  contract,  because  the  Statute  of  Frauds 
required  that  such  a  contract  be  in  writing  and  signed 
by  both  parties. 


60  CONTRACTS 

Decision:  Since  this  was  a  contract  for  the  sale  of 
personal  property  for  fifty  dollars  or  more,  it  was  not 
valid  unless  it  was  in  writing.  However,  the  Statute 
does  not  require  it  shall  be  signed  by  both  parties ;  but 
it  must  be  signed  by  the  party  who  is  sought  to  be 
charged  under  the  contract.  In  this  action  Williams 
is  seeking  to  charge  Robinson  who  has  signed  the  con- 
tract. Therefore,  the  fact  that  it  was  not  signed  by 
Williams  makes  it  no  less  binding  upon  Robinson. 

Mr.  Justice  Virgin  said  in  part:  "At  common  law, 
mutual  executory  contracts  for  the  sale  and  purchase 
of  goods,  wares  and  merchandise  of  whatever  value, 
and  however  provable  were  binding  and  enforcible. 
The  Statute  of  Frauds  intervened  and  prescribed  the 
kind  of  evidence  by  which  alone  they  might  be  estab- 
lished, by  entailing  upon  the  parties  certain  specified 
classes  of  contracts,  the  disability  of  enforcing  them 
so  long  as  the  essential  terms  remained  in  mere  un- 
written words. 

The  memorandum  need  be  signed  by  one  only  of  the 
parties — ^the  party  to  be  charged,  so  that  if  a  mutual 
executory  conl:ract,"T"aiid"a1nE0THm6n  law,  be  made,  and 
one  of  the  parties  obtains  from  the  other  the  *'note  or 
memorandum"  thereof  contemplated  by  the  statute, 
but  does  not  give  a  corresponding  one,  he  may  enforce 
it  although  the  other  cannot,  the  former  having  se- 
cured, while  the  other  has  not,  the  evidence  which  the 
statute  has  made  indispensable  to  its  enforcement." 

RULING  LAW 
Story  Case  Answer 

The  Statute  of  Frauds  in  every  section  requires  that 
the  note  or  memorandum  shall  be  signed  by  the  party 
to  be  charged  therewith.    Thus,  in  a  given  case,  it  may 


CONTRACTS  61 

happen  that  one  party  is  bound,  where  he  signs,  and 
the  other  is  not,  where  he  does  not  sign.  If  A  makes 
a  contract  with  B,  which  contract  conies  within  the 
statute,  and  B  signs  and  A  does  not,  B  may  be  sued 
on  this  contract,  but  A  could  not  be  unless  he  was 
willing  to  waive  the  benefit  of  the  statute.  So  it  is 
always  wise  to  see  that  both  parties  sign  the  contract. 
Thus,  in  the  Story  Case,  Mr.  Edwards  would  have 
been  liable  had  he  refused  to  pay  for  the  piano.  But 
since  the  company  did  not  sign,  it  can  not  be  sued,  for 
it  may  set  up  the  statute  as  a  defense,  that  is,  the  com- 
pany may  contend,  ""No  action  can  be  brought  on  this 
agreement  because  it  is  not  evidenced  by  a  contract  in 
writing  signed  by  the  party  to  be  charged.'' 


(4.)     Failure  to  Comply  With  the  Statute  Makes  the 

Contract  Unenforcible  in  Court 

STORY  CASE 

Bass,  &  ^0.,  grain  merchants,  agreed  orally  to  pay 
the  plaintiff,  Mr.  Weaver,  $500  for  his  threshed 
wheat.  Later  they  refused  to  buy  his  wheat  and  as- 
signed no  lawful  reason  for  the  refusal.  Mr.  Weaver 
sued  them  for  breach  of  contract.  Instead  of  setting 
up  the  Statute  of  Frauds,  which  would  have  been  a 
valid  defense,  since  the  price  of  the  wheat  was  more 
than  $50  (or  ten  pounds),  the  company  pleaded  that 
no  such  agreement  had  been  made  mth  Mr.  Weaver. 
Mr.  AVeaver  proved  that  such  a  contract  had  been 
made. 

Should  Mr.  Weaver  be  allowed  to  recover? 

ETJLING  COURT  CASE 

Britain  vs.  Rossiter,  Volume  11  Queen's  Bench  Di- 
vision Reports,  Page  123. 


62  CONTRACTS 

Rossiter,  desirous  of  engaging  a  person  to  work  for 
him,  conferred  with  Britain.  They  had  interviews  upon 
the  subject  on  the  17th,  19th  and  21st  of  April,  1877. 
On  the  21st,  which  was  Saturday,  they  came  to  an 
agreement,  by  which  Britain  was  to  be  engaged  for  one 
year,  to  begin  work  on  the  following  Monday,  the  23rd 
of  April.  Britain,  in  pursuance  of  the  terms  of  their 
oral  agreement  entered  upon  his  work  on  the  Monday 
as  agreed  upon.  In  this  work,  he  continued  for  three 
months  when  he  was  discharged  by  Rossiter  without 
cause.    Britain  then  sued  for  wrongful  dismissal. 

Rossiter  contended  that  the  agreement  was  within 
that  section  of  the  statute  which  provided  that  no  ac- 
tion may  be  brought  upon  a  contract,  when  it  cannot  be 
performed  within  a  year,  unless  the  agreement  be  re- 
duced to  writing  and  signed  by  the  party  to  be  charged 
therewith. 

Decision :  The  contract  was  made  on  Saturday  and, 
according  to  the  contract,  Britain  was  to  commence  his 
services  on  the  following  Monday,  and  to  serve  for  a 
year  from  that  day,  to  be  paid  a  year  from  that  Mon- 
day. Therefore,  this  contract  was  not  to  be  performed 
within  a  year  and  falls  within  the  Statute  of  Frauds. 

But  such  a  contract  is  not  necessarily  void.  It  is 
only  unenforcible  in  a  court.  Had  the  defendant,  Ros- 
siter, not  pleaded  the  Statute  of  Frauds  it  might  have 
been  enforced  against  him.  The  compliance  with  the 
statute  is  only  necessary  as  a  means  of  proving  the 
contract. 

Since,  however,  Rossiter  chose  to  set  up  the  statute, 
Britain  has  no  remedy  against  him  and  cannot  recover. 


CONTRACTS  63 

'  RULING  LAW 

Story  Case  Answer 

The  purpose  of  the  Statute  of  Frauds  was  to  supply 
or  compel  the  parties  to  a  contract  to  procure  better 
evidence  than  their  conflicting  oral  statements.  It  was 
not  the  purpose  of  it  to  make  the  contract  absolutely 
void.  So  the  fact  that  a  contract  is  not  reduced  to 
writing,  when  it  should  be  by  the  requirements  of  the 
Statute  of  Frauds,  does  not  render  that  agreement 
void,  but  renders  it  unenforcible  only.  If  the  person 
who  is  being  sued,  does  not  care  to  take  the  benefit  of 
the  statute,  and  does  not  set  it  up  as  a  defense  to  an 
action  on  an  unwritten  agreement,  within  the  statute, 
the  agreement  will  be  enforced  just  as  if  it  were  in 
writing. 

In  the  Story  Case,  Mr.  Weaver  should  be  allowed  to 
recover  for  the  above  reason.  But  if  the  contract  had 
been  illegal,  the  court  would  not  have  to  enforce  it — 
for  example,  if  A  promises  B  to  kill  X  for  $25  and 
does  not  do  it,  and  then  B  sues  A  for  breach  of  con- 
tract, and  A,  instead  of  pleading  the  illegality,  pleads 
that  he  did  not  promise,  and  B  proves  that  A  did  make 
the  agreement,  nevertheless  the  court  would  not  en- 
force the  contract  because  of  the  illegality.  But  the 
court  will  not  give  defendant  the  benefit  of  the  Statute 
of  Frauds  unless  the  defendant  pleads  the  Statute  of 
Frauds  as  a  defense. 


D.     Contracts  May  Be  Under  Seal  \ 

(1.)     The  Seal  Makes  It  Binding 
STORY  CASE 

Lord  Roaksby  said  to  his  old  servant,  James: 
*' James,  I  promise  to  give  you  a  thousand  pounds  next 
week  as  a  gift,  in  addition  to  your  regular  salary." 


64  CONTRACTS 

But  before  the  next  week,  Lord  Eoaksby  changed 
his  mind  and  refused  to  give  the  sum  to  James.  There- 
upon, James  sued  him  for  breaking  his  promise  to  pay. 
His  Lordship  defended  the  suit  on  the  grounds  that 
James  had  given  no  consideration  for  the  thousand 
pounds  and  hence  that  the  promise  was  not  binding. 

Is  the  defense  a  good  one! 

EUIiING  COUBT  CASE 

Page  vs.  Trufant,  Volume  2  Massachusetts  Reports, 
Page  159;  Volume  3  American  Decisions,  Page  41. 

After  Carlson  Trufant  and  Maria  Page  had  been 
married  for  several  years,  domestic  unhappiness  arose, 
and  they  agreed  to  a  separation ;  she  returned  to  live 
with  her  mother,  Mary  Page,  the  plaintiff  in  this 
action.  Carlson  made  a  bond,  that  is,  an  agreement 
under  seal,  in  favor  of  Mary  Page,  his  wife's  mother, 
whereby  he  promised  to  pay  to  her  a  certain  sum  for 
the  support  of  his  wife.  Sometime  thereafter,  Carlson 
refused  to  pay  the  money  he  had  promised.  Suit  was 
then  begun  by  Mary  Page  upon  this  bond. 

The  defense  of  Carlson  Trufant  was  that  the  bond 
was  given  without  consideration  and  it  was  therefore 
not  binding  upon  him.  In  reply  to  this,  Mary  Page 
contended  that  it  was  binding,  even  though  it  was  un- 
supported by  a  consideration,  because  the  agreement 
was  given  under  seal. 

Decision:  This  agreement  was  binding  upon  Carl- 
son Trufant,  notwithstanding  the  fact  that  there  was 
no  consideration.  It  was  under  seal,  and  a  sealed 
agreement  is  binding  without  any  consideration.  It 
is  often  said  that  a  seal  imports  consideration.  Strict- 
ly speaking,  that  is  not  true,  but  the  presence  of  a  seal 


CONTRACTS  65 

renders  consideration  unnecessary  to  make  the  agree- 
ment thereunder  binding. 

Mr.  Chief  Justice  Parson  said  in  part:  **A 
bond,  from  the  solemnity  of  its  execution,  imports 
a  consideration,  the  want  of  wliich  the  obligor  is  es- 
topped to  plead.  He  may  avoid  the  bond  by  showing 
that  it  was  obtained  by  fraud,  or  duress,  or  that  the 
consideration  is  illegal,  or  against  the  policy  of  the 
law." 

It  was  held  that  the  action  might  be  maintained  by 
Mary  Page  and  recovery  had  on  the  bond. 

RULING  LAW 
Story  Case  Answer 

It  has  been  pointed  out  heretofore  that  contracts  are 
classified  either  as  simple  or  sealed  contracts.  A  sim- 
ple contract,  in  this  classification  is  either  oral  or  writ- 
ten. A  sealed  contract  is  a  formal  agreement  or  instru- 
ment which  acquires  its  binding  force  from  the 
formality  of  its  execution. 

At  common  law  simple  contracts,  as  will  be  seen 
later,  were  binding  by  virtue  of  the  fact  that  they  were 
supported  by  a  consideration.  However,  sealed  con- 
tracts were  never  required  to  be  supported  by  any 
consideration.  All  that  was  necessary  to  render  a 
sealed  contract  binding  was  that  it  be  sealed  in  some 
appropriate  manner.  It  is  often  said  that  the  seal  im-* 
ports  a  consideration.  This  means,  merely,  that  con- 
sideration is  unnecessary. 

The  promise  of  Lord  Roaksby  was  not  binding  in  the 
Story  Case  because  it  was  neither  under  seal  nor  was 
there  any  consideration  given  for  his  promise.  His 
defense  is  therefore  good.  But  had  the  promise  been 
"onder  seal,  James  would  have  won  the  suit. 


66  CONTRACTS 

(2.)     No  Particular  Device  Is  Necessary  for  a  Seal 
STORY  CASE 

Gnstav  Hamil  habitually  signed  Ms  name  with  a 
flourish.  He  signed  a  contract  to  work  for  Dass  and 
Company  for  three  years  at  the  sum  of  $1,000  a  year, 
in  the  following  form: 

"I,  Gustav  Hamil,  promise  to  work  for  the  firm  of 
Dass  &  Company  for  three  years  for  the  yearly  salary 
of  $1,000. 

(Signed)  Gustav  Hamil.'* 

After  his  name  was  a  broad  stroke  of  the  pen  which 
may  have  meant  to  indicate  a  seal  or  which  may  have 
been  only  the  customary  flourish  with  which  he  signed. 

When  he  was  sued  by  Dass  &  Co.  on  the  written 
promise,  Gustav  defended  on  the  grounds  that  Dass  & 
Co.  had  paid  him  no  consideration  for  the  promise.  To 
this,  Dass  &  Co.  replied  that  this  contract  was  a  sealed 
contract  and  that  therefore  no  consideration  was 
needed. 

Who  ought  to  win  the  suit?  » 

EUUNG  COURT  CASE 

Osborne  vs.  Hubbard,  Volume  20  Oregon  Reports, 
Page  318;  Volume  11  Lawyer's  Reports  Annotated, 
Page  833. 

A  man  by  the  name  of  C.  C.  Parker  made  and  signed 
a  note  in  this  manner : 

**0n  or  before  October  1st,  1884,  I  promise  to  pay 
to  the  order  of  D.  M.  Osborne  the  sum  of  ninety  dollars 
with  interest. 

C.  C.  Parker,  (Seal)." 


CONTRACTS  67 

Before  the  note  was  delivered  to  Osborne  it  was 
signed  on  the  back  by  Hubbard,  the  defendant  ia  this 
action.  Suit  was  begun  by  Osborne  on  this  note  against 
Hubbard. 

If  the  foregoing  instrument  was  negotiable,  then 
Hubbard  was  only  an  indorser  thereon,  and  the  suit 
was  prematurely  brought  against  him.  If  the  note  was 
not  negotiable  then  he  was  a  joint  maker  of  the  note, 
and  suit  was  not  prematurely  brought.  A  seal  upon  a 
note,  otherwise  negotiable,  renders  it  non-negotiable. 
It  was  contended  by  the  defendant,  Hubbard,  that  this 
was  not  a  sealed  instrument,  that  the  word  ''seaP' 
printed  after  the  name  of  Parker  did  not  make  it  a 
sealed  instrument,  and  therefore  it  was  a  negotiable 
instrument,  and  that  he  was  liable  on  it  as  an  indorser. 

Decision:  ''In  this  state,  while  a  seal  may  be  made 
by  a  wafer  or  wax  attached  to  an  instrument,  it  may 
be  also  made  by  a  scroll  with  a  pen  after  the  signature 
to  the  instrument.  Not  only  was  there  a  scroll,  but  the 
word  'Seal'  was  written  on  it  also."  Anything  wliich 
purports  to  be  a  seal,  if  accompanied  by  an  intent  to 
make  the  instrument  a  sealed  one,  is  alone  sufficient. 

Thus  it  was  held  that  this  was  a  sealed  instrument, 
and  not  negotiable,  and  therefore  the  suit  was  properly 
brought,  and  judgment  was  given  for  the  plaintiff. 

EITLINO  LAW 
Story  Case  Answer 

The  seal  is  an  impression  upon  any  impressible  sub- 
stance. In  early  times  it  was  always  wax ;  but  a  wafer 
is  as  good,  and  so  is  any  other  tenacious  substance  on 
which  an  impression  is  made.  In  modern  times  the 
courts  are  less  strict  than  formerly  in  regard  to  what 


68  CONTRACTS 

constitutes  a  seal.  A  scroll,  or  a  scrawl  made 
with  the  pen  is  generally  held  sufficient.  Even  the 
word  *'seal"  written  out  after  the  name  is  held  to  be 
a  sufficient  device  to  pass  as  a  seal. 

In  all  these  cases  there  must  be  an  intention  that  it 
shall  be  a  sealed  instrument.  The  mere  fact  that  a 
person  makes  a  scroll  or  scrawl  after  his  name  will  not 
make  it  a  sealed  instrument,  unless  the  scroll  or  scrawl 
be  accompanied  by  the  intention  to  make  the  paper 
which  he  is  signing,  a  sealed  instrument. 

In  the  Story  Case,  the  whole  question  turned  on  the 
intention  of  Gustav  Hamil  when  he  signed  the  contract 
with  a  flourish.  If  he  intended  the  stroke  of  the  pen 
as  a  seal,  then  no  consideration  was  needed  to  make  the 
contract  binding.  If,  however,  he  intended  nothing 
when  he  made  the  flourish,  the  contract  was  only  a 
simple  contract  and  some  consideration  must  be  found 
or  his  promise  was  not  binding. 


2.     Parties  to  a  Contract 

A.     There  Must  Be  Two  or  More  Competent  Parties 

STORY  CASE 

During  the  war  with  Spain,  Signor  Amarillo,  then 
living  in  New  York  City,  made  an  agreement  with  Cas- 
sidy  Brothers  to  deliver  to  them  500  bales  of  cotton 
from  his  plantation  in  South  Carolina.  Cassidy  Bros, 
broke  this  agreement  without  assigning  any  good  rea- 
son. Amarillo  sued  them  for  breach  of  contract.  They 
defended  on  the  ground  that,  since  Amarillo  was  a 
Spaniard  not  naturalized  and  since  his  country  was  at 
war  with  the  United  States,  he  was  not  a  competent 
party  and  could  not  make  a  valid  contract. 

"Was  this  defense  good? 


CONTKACTS  69 

KXJLING  C0X7BT   CASE 

Harvey  vs.  Eohson,  Volume  53  Maine  Reports,  Page 
451 ;  Volume  89  American  Decisions,  Page  705. 

On  July  27, 1835,  Stephen  Neal  conveyed  land,  which 
he  then  owTied,  to  Samuel  E.  Crocker.  By  various  sub- 
sequent transfers  the  property  came  to  Hobson,  the  de- 
fendant in  this  action.  On  December  28, 1836,  Stephen 
Neal  died,  leaving  his  daughter  Lydia  Dennett,  who 
was  the  wife  of  Oliver  Dennett,  his  heiress.  On  Decem- 
ber 1st,  1851,  Oliver  Dennett  died.  Soon  thereafter, 
Lydia  made  claim  to  the  property  which  her  father  had 
conveyed,  during  his  lifetime,  to  Crocker.  She  based 
this  claim  upon  the  fact  that,  at  the  time  her  father 
made  the  conveyance,  he  was  insane  and  incapable  of 
making  a  binding  contract  or  sale ;  that  therefore,  this 
sale  was  voidable.  Since  she  was  the  next  of  kin  she 
had  the  right  and  elected  to  avoid  the  transaction.  She 
made  a  conveyance  to  the  plaintiff  in  this  action,  Har- 
vey. Harvey  then  brought  this  action  to  recover  the 
land  from  Hobson,  who  was  now  in  possession. 

Decision :  In  order  to  have  a  binding  contract  there 
must  be  two  or  more  parties  to  every  agreement,  and 
these  parties  must  be  competent  by  law  and  nature  to 
contract.  An  insane  person,  by  nature,  is  regarded  as 
unable  to  bind  himself  by  a  contract.  Thus  in  this  case, 
the  transaction,  in  which  the  land  was  sold  by  Stephen 
Neal  to  Crocker,  was  voidable  because  at  the  time  Neal 
was  insane.  Such  a  contract  may  be  avoided  by  him 
during  his  lifetime,  or  by  Ms  personal  representative 
after  his  death.  In  this  case,  it  was  avoided  by  his 
daughter  and  the  conveyance  made  by  her  to  Harvey 


70  CONTEACTS 

passed  title  to  him;  he  is  entitled  to  recover  the  land 
of  Hobson,  the  defendant. 

Judgment  was  therefore  given  for  Harvey  in  this 
action. 

EULINa  LAW 
Story  Case  Answer 

It  has  been  established  heretofore  that  every  con- 
tract implies  the  existence  of  at  least  two  parties.  Not 
even  is  a  contract  possible  between  an  individual  in 
one  capacity  and  the  same  individual  in  a  different 
capacity.  Here  it  is  to  be  noted  that  there  must  not 
only  be  two  or  more  parties  to  a  contract,  but  these 
two  parties  must  be  naturally  and  legally  competent  to 
enter  into  a  binding  agreement. 

Natural  incompetency  to  contract  exists  when  a 
person  has  not  sufficient  intelligence  to  be  aware  when 
he  has  no  power  of  consent  to  his  acts.  Such  a  person 
is  an  insane  person. 

Legal  incompetency  exists  when  a  person  is  forbid- 
den by  law  to  enter  into  a  contract,  even  though  such 
person  may  have  sufficient  intelligence  to  do  so.  At 
common  law,  a  married  woman  was  never  permitted  to 
contract. 

Thus  there  must  be  two  or  more  parties  to  every 
contract,  qualified  naturally  and  legally  to  assume  con- 
tractual obligations. 

In  the  Story  Case,  Cassidy  Brothers  had  a  good  de- 
fense. Amarillo  was  an  alien  enemy  and  hence  was 
not  a  competent  party  to  a  contract.  It  was  a  case  of 
legal  incompetency. 


CONTRACTS  71 

3.     Mutual  Agreement 

A.     There  Must  Be  an  Offer 

(1.)     Negotiations  Do  Not  Constitute  an  Offer 

STOBY  CASE 

The  following  advertisement  appeared  in  the  comity 
paper  for  several  days : 

**I  am  looking  for  a  buyer  for  my  family  horse, 
Bess.  She  is  six  years  old,  perfectly  broken,  and  I 
trust  my  children  behind  her.  Will  sell  for  a  reason- 
able price  as  I  am  leaving  for  Alaska. 

James  Tropper.*' 

On  the  second  day  he  received  the  following  letter : 

"I  accept  your  offer  in  the  county  paper  and  I 
will  pay  $150  for  Bess. 

(Signed)  Wm.  J.  Howe.'' 

Mr.  Tropper  had  previously  offered  the  horse  for 
sale  at  $100.00  but  he  decided  to  keep  her  until  he  re- 
turned' from  Alaska.  He  wrote  to  Mr.  Howe  telling 
him  of  his  decision  and  Mr.  Howe  immediately  started 
suit  for  breach  of  contract. 

Mr.  Tropper  defended  the  suit  on  the  grounds  that 
he  had  made  no  offer  of  sale  to  Howe. 

Is  the  defense  a  valid  one! 

EUUNa  COITET  CASE 

Moulton  vs.  Kershaw,  Voluvie  59  Wisconsin  Re- 
ports, Page  316. 

C.  J.  Kershaw  was  a  wholesale  dealer  in  salt,  doing 
business  in  the  city  of  Milwaukee.  Moulton  was  a  re- 
tail dealer  in  the  same  article  in  La  Crosse.  Sometime 
during  the  year  of  1882,  Kershaw  wrote  the  following 
letter  to  Moulton: 


72  CONTEACTS 

''Milwaukee,  Sept.  19,  1882. 
J.  H.  Moulton,  Esq.,  La  Crosse,  Wis. 

Dear  Sir :  In  consequence  of  a  rupture  in  the  salt 
trade, we  are  authorized  to  offer  Michigan  fine  salt, 
in  full  carload  lots  of  eighty  to  ninety  bbls.,  delivered 
at  your  city,  at  85c  per  bbl.  At  this  price  it  is  a  bar- 
gain, as  the  price  in  general  remains  unchanged. 
Shall  be  pleased  to  receive  your  order. 
Yours  truly, 

C.  J.  Kershaw.'' 

On  the  following  day,  Moulton  sent  a  telegram  to 
Kershaw  in  which  he  requested  a  shipment  of  2,000 
barrels  at  the  price  mentioned  in  the  letter  above  given. 
"When  Kershaw  received  the  letter  he  had  decided  not 
to  sell  the  salt  at  that  price.  Moulton  then  brought 
this  action  for  damages.  He  contended  that  the  letter 
he  received  from  Kershaw  was  an  offer  to  sell  at  the 
price  mentioned  and  that  his  acceptance  made  a  bind- 
ing contract.  But  Kershaw  argued  that  his  letter  was 
not  an  offer,  but  was  only  a  method  of  advertising;  a 
means  of  apprising  the  public  that  they  were  willing 
and  ready  to  receive  offers. 

Decision :  It  is  a  fundamental  principle  that  one  of 
the  contracting  parties  must  make  an  offer  in  some 
manner,  which  must  be  accepted  by  the  other  party, 
before  a  binding  contract  results.  An  offer  must  be 
an  unequivocal  willingness  on  the  part  of  one  making 
it  that  his  statements  are  to  be  considered  as  offers. 
Negotiations  by  which  he  advertises  his  willingness  to 
receive  an  offer  is  a  different  thing.  In  this  case,  Ker- 
shaw was  merely  holding  out  that  he  was  in  a  position 
to  receive  offers;  he  was  not  making  an  offer  at  that 


CONTEACTS  73 

time.  Conseqnently,  the  acceptance  of  Moulton  did  not 
make  a  contract  because  there  was  no  offer. 

Mr.  Justice  Tyler  said  in  part:  "The  language  in 
Kershaw's  letter  is  not  such  as  a  business  man  would 
use  in  making  an  offer  to  sell  to  an  individual,  a  defi- 
nite amount  of  property.  The  word  "sell"  is  not 
used.  They  say  "We  are  authorized  to  offer  Michigan 
fine  salt,  etc.,"  and  volunteer  an  opinion  that  the  terms 
stated  constitute  a  bargain.  They  do  not  say  we  offer 
to  sell  you.  They  use  general  language  proper  to  be 
addressed  generally  to  those  who  were  interested  in 
the  salt  trade.  It  is  clearly  in  the  nature  of  an  adver- 
tisement or  business  circular  to  attract  the  attention 
of  those  interested  in  that  business  to  the  fact 
that  a  good  bargain  in  salt  could  be  had  by  ap- 
plying to  them,  and  not  as  an  offer  by  which  they  were 
to  be  bound,  if  accepted  for  any  amount  the  persons  to 
whom  it  was  addressed  might  see  fit  to  order." 

It  was  therefore  decided  that  there  was  no  offer. 
Therefore  no  contract  resulted  and  judgment  was 
given  for  Kershaw,  the  defendant. 

EUUNG  LAW 
Story  Case  Answer 

It  is  a  fundamental  principle  of  the  law  of  contracts 
that  the  relation  is  one  voluntary  assumed.  The  law 
does  not  impose  this  relation  upon  parties  without 
their  consent,  either  express  or  implied.  The  first  step 
in  arriving  at  a  mutual  agreement  between  the  parties 
to  contract  is  the  expression  of  a  mllingness  on  the 
part  of  one  to  be  bound  by  the  contract.  The  expres- 
sion of  this  willingness  to  be  bound  is  what  the  law 
terms  an  "offer."  Before  a  contract  can  be  made 
one  party  must  always  take  an  offer,  either  expressly 


74  CONTEACTS 

or  by  implication.  He  must  in  some  way  manifest  his 
desire  and  willingness  to  assume  a  relation  with  an- 
other party  whereby  he  is  bound  to  such  party. 

It  is  not  always  easy  to  determine  whether  a  person 
has  manifested  this  willingness  to  be  bound ;  or  to  state 
it  otherwise,  it  is  sometimes  very  difficult  to  tell 
whether  a  person  has  made  an  offer. 

Negotiations  by  one  party  with  another  do  not  al- 
ways constitute  an  offer.  For  example,  one  person 
may  advertise  his  business,  stating  that  he  is  engaged 
in  selling.  These  statements  only  inform  the  public 
that  he  is  in  a  position  to  make  proposals  but  do  not 
constitute  an  actual  offer. 

Thus,  in  the  Story  Case,  Mr.  Tropper  announced 
only  that  he  was  willing  to  receive  offers  for  Bess.  The 
fact  that  he  put  no  definite  price  on  her  is  almost  con- 
clusive that  he  made  no  offer  of  sale.  Therefore,  there 
was  no  contract  and  his  defense  is  good. 


(2.)     The  Offer  Must  Be  Communicated  to  the  Offeiee 
yTORT  CASE 

Horace  Falk,  a  private  detective,  saw  a  face  in  a 
crowd  of  people  which  he  had  seen  in  the  Rogues '  Gal- 
lery and  had  recognized  as  that  of  a  man  ''wanted" 
for  a  bank  robbery  committed  in  1915.  He  caused  the 
man's  arrest  and  when  he  later  learned  that  a  reward 
of  $100  was  offered  by  the  Bankers'  Protective  As- 
sociation for  the  capture  of  bank  robbers,  he  applied 
for  the  reward.  The  association  refused  to  pay  the 
$100  on  the  ground  that,  as  no  knowledge  of  the 
reward  had  reached  Falk  before  making  the  arrest, 
there  had  been  no  offer  to  him,  because  commimication 
of  the  offer  is  one  of  the  essentials  of  an  offer. 


CONTRACTS  75 

Falk  replied  that  he  had  accomplished  the  result  de- 
sired and  that  he  was  therefore  entitled  to  the  reward. 
Should  he  have  it? 

BUUNG  COUBT  CASE 

Ball  vs.  Newton,  Volume  61  Massachusetts  Reports, 
Page  599. 

Horace  Newton  and  Joseph  Battles  signed  the  fol- 
lowing paper : 

**  Worcester,  Jan.  19,  1847. 
For  value  received,  we  jointly  and  severally 
promise  to  pay  the  master's,  clerk's,  messenger's 
and  assignee's  fees,  respectively,  in  the  case  of 
Joseph  Battles,  an  insolvent  debtor;  provided  the 
same  are  not  paid  witliin  six  months. 

Joseph  Battles. 

Horace  Newton." 

Shortly  after  the  above  paper  was  signed,  Joseph 
Battles  went  into  insolvency.  Ebeneezer  Ball  was 
chosen  as  his  assignee.  After  Ball  had  done  every- 
thing necessary  to  close  up  the  affairs  of  Battles,  this 
paper  came  to  his  notice.  He  thereupon  demanded  of 
Newton  compensation  for  his  services,  since  he  had 
not  otherwise  been  paid  within  six  months  after  their 
rendition.  Newton  refused  to  pay  anything  under  the 
agreement.  After  his  death  tliis  suit  was  brought 
against  the  defendant,  Newton,  the  personal  represen- 
tative of  Horace  Newi;on,  deceased. 

On  behalf  of  Newton  it  was  urged  that  Ball  had  no 
rights  under  the  signed  agreement  because  he  was  not 
aware  of  its  existence  until  after  he  had  rendered  the 
services  in  question. 


76  CONTEACTS 

Decision :  There  was  no  contract  between  Ball  and 
Newton.  Althongh  Ne'v\i;on  offered  in  writing  to  pay 
for  just  such  services,  this  offer  was  never  communi- 
cated to  Ball  until  he  had  performed  the  duties.  If 
this  paper  had  been  shown  to  Ball,  and  he  had  accepted 
the  offer,  and  had  become  assignee,  and  had  performed 
the  services  upon  the  strength  of  the  offer,  there  would 
have  been  a  contract.  But  before  an  offer  can  be  ac- 
cepted, it  must  first  have  been  communicated  to  the 
offeree. 

Judgment  was  therefore  given  for  the  defendant, 
Newton. 

RULING  LAW 
Story  Case  Answer 

It  has  been  stated  before,  that  the  making  of  an  offer 
is  the  first  step  by  which  contracting  parties  come  to- 
gether. It  is  an  expression  on  the  part  of  one  of  a 
willingness  and  a  desire  to  assume  a  contractual  rela- 
tion. No  contract  will  result,  unless  the  person  to 
whom  the  offer  has  been  made,  expresses  his  willing- 
ness and  desire  to  accept  the  offer.  It  is  evident  that 
an  offer  cannot  be  accepted  until  it  has  been  commimi- 
cated  to  some  one  who  may  claim  the  benefit  of  the 
acceptance.  The  mere  fact  that  a  person  accidentally 
performs  some  act  which  is  in  accordance  with  an  un- 
kno'VNTi  offer  does  not  entitle  that  person  to  claim  the 
benefit  of  the  offer.  This  frequently  happens  in  cases 
where  a  reward  is  offered  for  the  apprehension  of  a 
criminal.  Some  person,  who  is  not  aware  of  the  offer, 
captures  the  criminal ;  but  he  is  not  legally  entitled  to 
the  reward;  he  did  not  know  of  the  offer,  and  could, 
therefore,  not  accept  it.  Hence,  in  the  Story  Case,  Falk 
cannot  obtain  the  reward. 


CONTRACTS  77 

(3.)     An  Offer  May  Be  Made  to  the  Public 
STOBY  CASE 

In  Coyote,  Montana,  a  handbill  to  the  following  ef- 
fect was  posted : 

$500  reward  for  the  arrest  and  conviction  of  the 
man  or  men  who  stole  the  horse  of  the  undersigned 
from  his  stable  on  the  night  of  Mar.  5. 

(Signed)  John  Hilup. 

A  stranger  from  New  York  City,  Mr.  Harry  Dur- 
wand,  chanced  upon  the  sign  ,and  soon  after  he  caused 
the  arrest  and  conviction  of  the  thief.  When  he  claimed 
the  reward,  however,  Hilup  refused  to  pay,  claiming 
that  he  meant  the  offer  to  apply  only  to  inliabitants  of 
Coyote  County  in  which  the  bills  were  posted. 

Durwand  immediate^  brought  suit  for  the  reward. 
Is  he  entitled  to  it? 

EXJUNG  COUET  CASE 

Seymour  vs.  Armstrong,  Volume  62  Kansas  Reports, 
Page  720 ;  Volume  64  Pacific  Reports,  Page  612. 

On  February  15,  1896,  Armstrong,  a  commission 
merchant  in  Topeka,  Kansas,  inserted  an  advertise- 
ment containing  the  follomng  proposition  or  offer  in 
a  weekly  newspaper : 

**"We  will  pay  lO^^c  for  all  fresh  eggs  shipped  us 
to  arrive  here  by  February  22.  Acceptance  of  our 
bid  with  number  of  cases  stated  to  be  sent  by  Febru- 
ary 20.'* 

On  February  20,  F.  T.  Seymour,  a  rival  commission 
merchant  of  Topeka,  sent  the  following  note  to  Arm- 
strong in  response  to  the  offer  of  the  latter : 


78  CONTEACTS 

"I  accept  your  offer  in  Mercliants'  Journal, 
IQi^c  for  fresh  eggs,  and  will  ship  you  450  cases 
fresh  eggs  to  arrive  on  or  before  February  22." 

On  receipt  of  this  note,  Armstrong  at  once  notified 
Seymour  that  they  would  not  accept  the  eggs  if 
shipped.  Seymour,  nevertheless,  sent  the  eggs ;  Arm- 
strong refused  to  accept  them.  Seymour  sold  the  eggs 
at  such  price  as  he  could  get  and  brought  this  action, 
claiming  as  damages  the  difference  between  the  price 
offered  by  Armstrong,  and  the  price  for  which  the 
eggs  were  later  sold. 

Armstrong  contended  that  his  advertisement  was  not 
an  offer  which  could  be  made  binding  upon  him  by  a 
particular  acceptance,  because  it  was  only  a  general 
announcement  to  the  public. 

Mr.  Justice  Johnston  said  in  part:  "A  contract 
may  originate  in  an  advertisement  addressed  to  the 
public  generally,  and,  if  the  proposal  be  accepted  by 
any  one  in  good  faith,  without  qualifications  or  con- 
ditions, the  contract  is  complete.'* 

It  was  decided  that  this  was  a  good  offer  to  the  pub- 
lic generally  and  that  an  acceptance,  according  to  the 
terms  of  the  offer,  would  be  binding  on  Armstrong. 

RULING  LAW 
Story  Case  Answer 

An  offer  may  be  made  to  one  particular  person,  or 
to  a  certain  class  of  persons,  or  it  may  be  made  to  the 
public  generally.  If  the  offer  is  made  to  a  particular 
person,  that  person  only  may  accept  it.  If  it  be  made 
to  a  class  of  person,  any  person  in  that  class  may  ac- 
cept it.  Where  the  offer  is  made  to  the  public  gener- 
ally any  one  of  the  public  may  accept  it.    One  who 


CONTRACTS  79 

purports  to  accept  an  offer  of  this  kind,  mnst  have 
been  aware  of  the  offer  when  he  performed  the  par- 
ticular act,  which  he  claims  was  an  acceptance  of  the 
offer. 

In  the  Story  Case,  Durwand  should  get  the  reward 
because  he  had  knowledge  of  the  offer  when  he  caused 
the  arrest  and  conviction  of  the  thief.  Hilup,  by  word- 
ing the  bill  so  that  it  was  an  offer  to  anyone  who  should 
read  it,  disproved  his  contention  concerning  the  limits 
of  the  reward. 


(4.)     An  Offer  by  Telegram  or  Letter  Is  Complete 
When  the  Message  Is  Received 

STOEY  CASE 

Alderson  Brothers,  brokers  in  New  York  City,  sent 
their  Chicago  representative  to  the  firm  of  Barnwell 
&  Co.  in  Chicago,  to  negotiate  for  some  wheat  which 
Alderson  Bros,  needed  very  badly.  Barnwell  &  Co. 
did  not  wish  to  sell  until  the  market  became  more  firm 
and  stable.  The  Alderson  representative,  however, 
persuaded  them  to  mail  an  offer  to  Alderson  Bros,  for 
the  sale  of  10,000  bushels  at  QOi/aC.  Barnwell  &  Co. 
knew  that  it  required  20  or  24  hours  for  a  letter  to 
reach  New  York ;  hence  if  the  markets  should  advance 
in  the  next  15  hours  they  could  countermand  the  offer 
by  telegraph.  But  the  Alderson  representative  tele- 
graphed his  receipt  and  the  fact  of  the  offer  to  Aider- 
son  Bros,  and  Alderson  Bros,  immediately  telegraphed 
acceptance.  Ten  hours  later  the  market  advanced  to 
94c  and  Barnwell  &  Co.  telegraphed  a  revocation  of 
the  offer.  This  message,  Alderson  Bros,  received  be- 
fore the  letter  containing  the  offer.    Barnwell  &  Co. 


80  CONTRACTS 

refused  to  deliver  the  wheat  on  the  grounds  that  they 
revoked  the  offer  before  acceptance. 

Alderson  Bros,  claim  that  the  offer  was  complete 
when  mailed  and  could  be  accepted  any  time  after  it 
was  mailed.  Barnwell  &  Co.  claim  that  an  offer  is 
never  completed  until  the  letter  containing  the  offer 
is  received.  Both  parties  admit  that  the  conununica- 
tion  of  the  Alderson  representative  to  Alderson  Bros, 
was  not  an  offer  from  Barnwell  &  Co.  and  could  not 
be  accepted. 

EXTLING  COiniT  CASE 

Adams  vs.  Lindsell,  Volume  1  Barnwall  and  Ander- 
son English  Reports,  Page  681. 

Lindsell  was  a  wool  dealer  at  St.  Ives  in  the  county 
of  Huntington.  On  Tuesday  the  22nd  of  September, 
Lindsell  wrote  the  following  letter  to  Adams,  who  was 
a  woolen  manufacturer  in  Worcestershire : 

**We  now  offer  you  eight  hundred  tods  of 
wether  fleeces,  of  a  good  fair  quality  of  our  coun- 
try wool,  at  35s  6d  per  tod, — receiving  your  answer 
in  course  of  posf 

The  letter  was  misdirected  by  Lindsell,  as  a  result 
of  which  it  did  not  reach  Adams  until  Friday  the  25th. 
Adams  immediately  wrote  a  letter  of  acceptance.  Be- 
cause of  the  delay  in  receiving  the  offer,  the  acceptance 
did  not  reach  Lindsell  until  Tuesday  the  29th.  A  reply 
in  course  of  post,  had  the  offer  been  directed  rightly 
would  have  reached  Lindsell  on  Sunday  or  Monday, 
27th  or  28th  respectively.  On  Monday,  not  hearing 
from  Adams,  Lindsell  sold  all  the  wool  then  on  hand. 
When  he  did  receive  the  letter  of  acceptance,  he  could 
not  fill  the  order,  and  accordingly  replied  that  it  was 
too  late.    Adams  then  sues  for  damages. 


CONTRACTS  81 


; 


The  defendant  Lindsell  contended  that  there  was  no 
contract  because  he  had  put  a  time  limit  upon  the  ex- 
istence of  the  offer.  He  argued  that  the  offer  was  re- 
voked before  it  was  accepted. 

Decision :  An  offer  becomes  complete  when  it  is  re- 
ceived by  the  offeree.  An  offer  by  mail  or  telegraph 
is  a  continuing  offer  which  remains  open  until  it  is 
received  by  the  offeree,  unless  in  some  way  a  revoca- 
tion of  the  offer  is  communicated  to  the  offeree  before 
he  receives  or  accepts  the  offer. 

The  court  said  in  this  case:  "The  defendants  must 
be  considered  in  law  as  making,  during  every  instant 
of  the  time  their  letter  was  travelling,  the  same  identi- 
cal offer  to  the  plaintiff,  and  then  the  contract  is  com- 
plete by  the  acceptance  of  it  by  the  latter.  Then,  as 
to  the  delay  in  notifying  the  acceptance,  that  arises  en- 
tirely from  the  mistake  of  the  defendants,  and  there- 
fore it  must  be  taken  as  against  them  that  the  plain- 
tiff's answer  was  received  in  the  course  of  post.'* 

Judgment  was  therefore  given  for  Adams  in  this 
action. 

EXTLING  LAW 
Story  Case  Answer 

Where  a  person  makes  an  offer  by  mail  or  by  a  tele- 
gram, it  is  obvious  that  the  offer  is  not  complete  until 
it  has  been  received  by  the  person  to  whom  it  is  ad- 
dressed. For,  until  he  receives  it,  he  knows  nothing  of 
it,  and  it  has  just  been  established  that  a  person  cannot 
accept  an  offer  until  it  has  been  communicated  to  him. 

In  the  Story  Case,  the  offer  was  meant  to  be  com- 
plete when  the  letter  containing  the  offer  was  received. 
Hence  Alderson  Bros,  should  lose. 


82  CONTRACTS 

(5.)     An  Offer  May  Be  One  of  Four  Kinds 
a.    An  Offer  of  an  Act  for  a  Promise 
STOBY  CASE  i 

Praffron  Juiner,  a  carriage  maker,  said  to  Hertes 
Unow: 

**I'll  paint  your  carriage  for  $15.00." 
Ilnow  replied: 

**A11  right,  Praffon,  I'll  send  it  around  and  pay 

when  it  is  finished." 

After  the  carriage  was  painted,  Unow  refused  to  pay 

$15,  giving  as  a  reason  that  $15  was  too  high  a 

price.     Junier   sued   him   for   the   agreed   charges. 

Should  he  get  it? 

RXTUKG  COXTBT  CASE 

Day  vs.  Caton,  Volume  119  Massachusetts  Reports, 
Page  513 ;  Volume  20  American  Reports,  Page  347. 

Day  was  the  owner  of  lot  27,  and  Caton  the  owner 
of  an  adjoining  lot,  number  29,  both  located  in  the  city 
of  Boston.  Day  built  a  brick  party  wall,  placing  one- 
half  of  the  wall  on  his  lot  and  one-half  on  the  lot  be- 
longing to  Caton.  It  was  shown  in  evidence  that  Day 
and  Caton  had  some  conversation  about  the  wall  previ- 
ous to  its  erection.  It  was  understood  between  them 
that  Day  was  to  be  repaid  for  putting  up  the  wall 
partly  on  the  lot  of  Caton. 

When  the  wall  was  finished  and  used  thereafter  by 
Caton  he  refused  to  pay  anything  towards  the  expendi- 
tures incurred  by  Day  in  its  erection.  Day,  thereupon, 
brought  this  action  seeking  to  recover  from  Caton  half 
the  expenses  by  him  made  in  the  erection  of  the  wall. 

Decision :  The  jury  found,  as  a  matter  of  fact,  that 
Day  offered  to  build  this  wall  if  Caton  would  promise 


CONTRACTS  83 

to  pay  a  part  of  the  cost-  when  he  should  use  the  wall. 
The  evidence  further  showed  that  Caton  did  promise 
to  pay  his  share  if  Day  would  build  it.  Therefore,  when 
Day  built  the  wall,  Caton 's  promise  to  pay  a  portion 
of  the  expenditures  became  binding  upon  him.  This 
was  an  instance  where  one  party  makes  an  offer  of 
an  act  for  a  promise  on  the  part  of  the  other  person. 
Judgment  was  given  for  Day  in  this  action. 

RULING  LAW 
Story  Case  Answer 

An  offer  may  be  one  of  four  kinds.  First,  it  may 
take  the  form  of  an  offer  of  an  act  for  a  promise.  That 
is,  the  offeror  states  that  he  will  perform  certain  ser- 
vices, accomplish  a  particular  task,  if  the  offeree,  the 
person  to  whom  he  makes  the  offer,  will  make  a  prom- 
ise in  return.  The  Story  Case  is  an  example  of  this 
type.  Junier  offered  an  act  which  Ilnow  accepted  by 
a  promise  to  pay  $15  and  Junier  can  recover  this 
amount: 


b.    An  Offer  of  a  Promise  for  an  Act 
STOET  CASE 

Farmer  Hillhouse  needed  to  have  his  orchard 
pruned.  He  made  the  following  offer  to  Poncar  Bus- 
kins, who  was  an  experienced  pruner : 

"If  you  will  prune  my  orchard,  I  will  pay  you  $3 
a  day  for  the  work,  as  soon  as  you  have  finished  it. ' ' 

Four  days  later,  Buskins  finished  the  work  and  de- 
manded $12  in  payment.  IlilUiouse  refused  to  pay, 
on  the  ground  that  Buskins  had  not  promised  to  do 
the  pruning  and  that  he  had  therefore  hired  anothei 
man  to  do  it.    Is  this  a  good  answer  ? 


84  CONTEACTS 

ETJUNa  COTJRT  CASE 

Babcock  vs.  Raymond,  Volume  2  Hinton's  New  York 
Reports,  Page  61. 

Eaymond  was  the  proprietor  of  the  New  York  Daily 
Times,  a  newspaper  published  in  the  city  of  New  York. 
In  September  of  1865,  while  the  probability  of  the  elec- 
tion of  Mr.  Fremont  to  the  position  of  President  of 
the  United  States,  was  a  subject  much  discussed  and 
commented  upon  in  newspapers  and  elsewhere,  Bab- 
cock prepared  and  sent  to  Raymond  an  article  bearing 
upon  the  election.  The  subject  matter  of  the  article 
was  drawn  from  an  investigation  made  during  the  sum- 
mer of  that  year,  in  a  very  extensive  canvass  among  a 
large  number  of  people  in  various  conditions. 

The  New  York  Daily  Times  contained  a  certain  col- 
umn for  the  publication  of  such  articles.  At  the  head 
of  the  column  was  a  statement  that  all  communication 
accepted  and  published  would  be  paid  for  at  certain 
regular  rates.  Although  Babcock  had  prepared  and 
sent  his  article  in  and  it  had  been  published,  Eaymond 
refused  to  give  proper  compensation.  Eelying  upon 
this  offer,  Babcock  thereupon  sued  him  for  the  value 
of  the  article. 

It  was  contended  by  Eaymond  that  he  had  not  made 
an  offer  which  had  been  accepted  by  Babcock,  and 
therefore  there  was  no  contract. 

Decision :  In  this  case,  there  was  an  offer  by  Eay- 
mond, in  his  paper,  of  a  promise  for  an  act.  The  paper 
contained  the  statement  that  certain  prices  would  be 
paid  for  articles  accepted  and  published.  This  was  a 
standing  offer  which  contemplated  acceptance  by  an 
act  on  the  part  of  the  person  who  accepted.  Thus,  when 
Babcock  prepared  and  sent  in  his  article,  and  when  it 


CONTRACTS  85 

was  accepted  and  published  by  Raymond,  the  contract 
became  complete  and  binding  upon  Raymond. 

Thereupon  it  was  held  that  Babcock  might  recover 
the  usual  price  for  such  an  article. 

RULING  LAW 
Story  Case  Answer 

It  has  just  been  established  that  an  offer  may  be  in 
the  form  of  an  offer  of  an  act  for  a  promise.  If  the 
promise  is  made  and  the  act  is  done,  a  binding  con- 
tract results.  On  the  other  hand,  an  offer  of  a  prom- 
ise may  be  made  which  contemplates  acceptance  by  an 
act.  So  long  as  tliis  promise  remains  unrevoked,  any 
one,  knowing  of  the  offer  of  the  promise,  who  performs 
the  act,  comes  into  a  contractual  relation  with  the  per- 
son making  the  promise  and  the  agreement  becomes 
binding.  This  is  well  illustrated  by  cases  where  an 
offer  to  pay  a  reward  to  any  one,  who,  knowing  of  the 
offer,  performs  the  act  of  capturing  the  criminal.  In 
the  Story  Case,  the  offer  which  Farmer  Hillhouse  made 
contemplated  acceptance  by  the  act  of  pruning  the 
orchard  and  he  should  not  have  expected  a  promise. 
Buskins  can  clearly  recover  the  $12. 


c.     An  Offer  of  a  Promise  for  a  Promise 
STORY  CASE 

Silas  Hightower,  a  farmer,  said  to  Buskin,  a  laborer, 

*' Buskin,  if  you  will  work  for  me  for  three 
months,  I'll  pay  you  $20  a  month.  You  will 
start  work  next  week  and  until  that  time  do  not 
hire  out  to  anybody  else  because  you  are  under 


86  CONTRACTS 

contract  with  me.    In  return,  I  promise  to  hire  yon 
next  week." 

Buskin  assented  to  this  agreement  but  on  the  next 
day  he  hired  out  to  Barrett  on  a  year's  contract,  there- 
by disregarding  his  agreement  with  Hightower. 

Hightower  sued  Buskin  for  breach  of  the  contract 
to  work  for  him.  Buskin  defended  on  the  ground  that 
Hightower  had  given  him  no  consideration  for  the 
promise  to  work,  and  hence  that  the  promise  was  not 
binding. 

Which  party  should  prevail? 

RUUNa  COUET  CASE 

George  vs.  Harris,  Volume  4  New  Hampshire  Re- 
ports, Page  533 ;  Volume  17  American  Decisions,  Page 
446. 

Harris,  one  of  twenty-nine  men,  signed  his  name  to 
the  following  agreement : 

"For  the  purpose  of  providing  a  suitable  court- 
house in  the  town  of  Plymouth,  we,  the  subscrib- 
ers, severally  promise  to  pay  the  sums  set  against 
our  respective  names,  or  so  much  thereof  as  may 
be  necessary." 

Opposite  the  name  of  Harris  was  set  the  sum  of  one 
hundred  dollars.  But  when  called  upon  for  his  sub- 
scription, he  refused  to  pay  it  or  any  part  thereof. 
Suit  was  begun  against  him  for  the  recovery  of  one 
hundred  dollars. 

His  defense  consisted  of  the  plea  that  his  promise 
was  made  without  consideration  and,  therefore,  was 
not  binding  upon  him.  He  contended  that  he  made  an 
offer  of  a  promise,  but  that  promise  did  not  become 


CONTRACTS  87 

binding  upon  him  by  the  promises  of  others  who  like- 
wise signed  the  agreement. 

Decision:  This  is  a  case  where  one  person  makes 
an  offer  of  a  promise  to  do  something,  which  is  ac- 
cepted by  a  promise  on  the  part  of  others  to  do  the 
same  or  a  similar  thing.  His  offer  of  a  promise  was 
accepted  by  the  promise  of  the  others  who  signed  the 
same  agreement.  Therefore,  his  promise  is  binding 
and  recovery  may  be  had  against  him. 

Accordingly,  it  was  held  that  the  one  hundred  dollars 
might  be  recovered  from  him  in  accordance  with  his 
agreement. 

^  KUMNG  LAW 

Story  Case  Answer 

An  offer  qnite  frequently  takes  the  form  of  an  offer 
of  a  promise  for  a  promise.  Where  such  an  offer  is 
made,  it  becomes  binding  when  the  promise  in  return 
is  made  by  the  person  to  whom  the  offer  of  the  prom- 
ise was.  first  made. 

In  the  Story  Case,  Hightower  clearly  should  prevail. 
He  did  give  consideration  for  Buskin's  promise  to 
work — the  consideration  was  Hightower 's  promise  to 
hire  him.    A  promise  is  valuable  consideration. 


d.     An  Offer  of  a  Promise  Conditional  Only  cm  Mere 

Assent  of  Other  Party  Must  Be  Under  Seal 

STORY  CASE 

Howard  Engle  drew  up  the  following  instrument : 
"In  ten  days  I  shall  convey  to  my  son-in-law, 
John  Mitchner  ten  acres  of  land  on  the  bank  of 
Walnut  Creek." 

(Signed)    Howard  Engle.      (Seal) 


88  CONTRACTS 

Howard  Engle  gave  this  document  to  John,  telling 
hini  he  desired  to  make  this  gift.  John  said  that  he 
would  be  glad  to  have  the  land  and  thanked  Engle. 

Later  Engle  changed  his  mind  and  refused  to  convey 
the  land.  Mitchner  sued  him  and  he  defended  on  the 
ground  that  Mitchner  gave  no  consideration  for  the 
promise  to  convey,  and  also  on  the  ground  that  there 
had  been  no  offer  and  acceptance. 

Which  party  should  win? 

EULING  COXTRT  CASE 

O'Brien  vs.  Boland,  Volume  116  Massachusetts  Re- 
ports, Page  481;  Volume  44  North  Eastern  Reporter, 
Page  602. 

Boland  was  in  need  of  money.  He  was  making  de- 
termined attempts  to  sell  land  which  he  owned.  Sev- 
eral times  he  had  offered  it  to  O'Brien  at  various 
prices,  but  none  of  the  offers  were  accepted.  Although 
the  property  was  reasonably  worth  $29,000,  he  made 
out  a  written  agreement,  in  which  he  offered  to  sell  the 
land  to  O'Brien  for  the  sum  of  $26,000,  provided  he 
accepted  the  offer  within  ten  days.  This  agreement 
was  not  supported  by  any  consideration,  but  it  was 
signed,  sealed,  and  delivered  to  O'Brien  by  Boland. 
Before  the  ten  days  had  expired,  Boland  notified 
O'Brien  that  he  had  withdra\vTi  his  offer  to  sell  at  the 
price  above  mentioned.  After  this  notice  by  Boland, 
and  before  the  ten  days  had  passed,  O'Brien  notified 
him  of  his  intention  to  accept  the  offer,  and  that  he  was 
ready  and  willing  to  pay  the  purchase  price  and  re- 
ceive a  conveyance  therefor.  But  Boland  refused  to 
perform.  Thereupon,  O'Brien  brought  this  bill  ask- 
ing that  Boland  be  compelled  to  convey  the  land  in 
question.  ^^ 


CONTRACTS  89 

It  was  contended  by  Boland,  by  way  of  defense,  that 
his  offer  to  sell  was  not  binding  upon  him,  because  it 
was  not  accepted  until  he  had  \\ithdrawn  it. 

Decision:  As  a  general  rule,  an  offer  of  a  promise 
to  do  something  is  not  binding  upon  the  person  mak- 
ing the  offer,  unless  the  offer  is  accepted  by  some  act 
or  promise  in  return  therefor,  which  constitutes  the 
consideration  to  support  the  agreement.  But  where 
an  offer  of  a  promise  is  made  in  writing,  is  sealed  and 
delivered,  it  is  binding  without  any  act  or  promise  in 
return  from  the  offeree.  It  cannot  be  revoked  or  with- 
drawn and  is  binding  upon  the  offerer  if  accented  ac- 
cording to  its  terms. 

Therefore,  judgment  was  given  for  O'Brien  in  this 
action. 

EUIilNGLAW 
Story  Case  Answer 

In  each  of  the  types  of  offers  heretofore  discussed, 
we  have  seen  that  the  offer  contemplated  some  act  or 
promise  on  the  part  of  the  offeree,  the  person  to  who 
the  offer  was  made.  This  promise,  or  this  act,  in  re- 
turn, constitutes  the  consideration  which  makes  the 
agreement  binding.  A  simple  offer  made  by  a  person, 
in  return  for  which  no  act  or  promise  is  made  by  way 
of  acceptance,  is  not  binding  upon  the  person  who 
makes  the  offer.  But  if  he  reduces  his  offer  to  writing, 
signs,  seals,  and  delivers  it  to  the  offeree,  it  becomes 
binding  upon  him,  and  he  cannot  revoke  it,  except  in 
the  manner  agreed  upon.  The  presence  of  the  seal,  as 
has  been  noted,  dispenses  with  the  necessity  of  any 
consideration. 

In  the  Story  Case,Engel  would  lose.  A  contract  un- 
der seal  requires  no  consideration  to  make  it  binding. 


90  CONTEACTS 

(6.)     An  Offer  Must  Be  Certain 
STORY  CASE 

Barford  &  Company,  grain  merchants,  wrote  the  fol- 
lowing to  David  Ellis,  a  farmer : 

"If  yon  will  promise  to  sell  us  all  the  wheat  you 
raise  this  year,  we  will  promise  to  buy  it. ' ' 

Ellis  promised,  and  was  preparing  to  deliver  the 
wheat  when  Barford  &  Company  refused  to  accept. 
Ellis  sued  them  for  breach  of  the  contract.  Barford 
&  Company  defended  on  the  grounds  that  the  contract 
was  void  because  (1)  The  amount  of  wheat  was  uncer- 
tain and  (2)  The  price  was  not  fixed. 

Was  the  contract  uninforcible  because  of  the  xmcer- 
tainty? 

EULINa  OOUET  CASE 

Sherman  vs.  Kitsmiller,  Volume  17  Sergeant  & 
Bawles  Pennsylvania  Reports,  Page  45. 

George  Sherman  promised  Elizabeth  Koons  that  he 
would  give  her  a  hundred  acres  of  land  if  she  would 
live  with  and  keep  house  for  him  until  she  married. 
In  reliance  upon  this  promise,  she  lived  with,  and  kept 
house  for  him  until  she  married  George  S.  Sherman, 
his  nephew.  Frequently,  during  his  life,  George  Sher- 
man was  requested  by  Elizabeth  to  make  the  convey- 
ance of  a  hundred  acres  to  her.  He  persistently  de- 
clined to  commit  himself  about  the  offer  he  had  made. 
After  his  death,  Kitsmiller,  his  administrator  refused 
absolutely  to  recognize  the  claim.  Thereupon,  George 
S.  Sherman,  on  behalf  of  his  wife  Elizabeth,  brought 
this  action,  seeking  to  have  the  defendant  Kitsmiller, 
as  administrator  of  George  Sherman  deceased,  convey 
one  hundred  acres  of  land  to  his  wife. 


CONTRACTS  91 

The  defense  consisted  in  the  fact  that  the  offer,  as 
made  by  the  deceased  donor,  was  so  uncertain  that  it 
was  not  rendered  binding  by  the  performance  of  the 
services  in  question  by  Elizabeth. 

The  court  said  in  part:  *'If  it  had  been  a  promise 
to  give  her  one  hundred  pieces  of  silver,  this  would  be 
too  vague  to  support  an  action.  For  what  pieces? 
Fifty  cent  pieces  or  dollars!  What  denomination? 
One  hundred  cows  or  sheep  would  be  sufficiently  cer- 
tain, because  the  intention  would  be,  that  they  should 
be,  at  least,  of  middling  quality ;  but  one  hundred  acres 
of  land,  without  estimation  of  value,  without  relation 
to  anything  which  could  render  it  certain,  does  appear 
to  me  to  be  the  most  vague  of  all  promises ;  and  if  any 
contract  can  be  void  for  its  uncertainty,  this  must  be. 
One  hundred  acres  of  Rocky  Mountain  or  in  the  Con- 
estoga  manor — one  hundred  acres  in  the  mountains  of 
Hanover  County,  Virginia,  or  in  the  Coneqango  rich 
lands  of  Adams  County?  One  hundred  acres  of  George 
Sherman's  mansion  place  at  $80  or  $100  an  acre 
or  one  hundred  acres  of  his  barren  land  at  $5  an 
acre." 

The  offer  was  so  uncertain  that  the  court  held  that 
no  contract  resulted  from  their  agreement. 

Judgment  was  therefore  given  for  Kitsmiller. 

EUUNGLAW 
Story  Case  Answer 

The  terms  of  the  offer  should  be  sufficiently  certain 
so  that  the  agreement  can  be  ascertained,  without  hav- 
ing to  remake  the  contract  for  the  parties.  The  ques- 
tion of  certainty  is  one  of  degree ;  no  definite  rules  can 
be  laid  down  which  will  guide  a  person  in  all  cases. 
If  the  offer  has  reference  to  the  sale  of  property,  the 


92  CONTEACTS 

offer  should  contain  a  reasonable  description  of  the 
property,  the  amount  thereof,  and  the  price  which  the 
offerer  is  willing  to  take  for  the  same.  If  it  has  some 
element  of  time  in  it,  the  time  should  be  definitely 
set,  or  made  dependent  upon  some  event  which  is  rea- 
sonably easy  to  ascertain. 

But  not  every  contract  is  void  because  the  amount 
and  price  had  not  been  fixed  by  the  parties.  In  the 
Story  Case,  for  instance,  the  court  would  enforce  the 
contract.  The  amount  of  wheat  was  "all  the  wheat" 
harvested  by  Ellis  that  year;  the  price  would  be  the 
market  price  of  wheat  at  the  time  of  delivery. 

Since  there  is  no  fixed  market  price  for  land,  the 
price  of  land  in  a  contract  of  sale  must  ordinarily  be 
set  by  the  parties.  But  this  is  not  so  with  wheat  or 
corn  or  any  other  commodity  which  is  quoted  in  the 
markets. 


(7.)  The  Terms  of  the  Offer  May  Not  All  Be  Communicated 

a.     Unexpressed  Terms 

STORY  CASE 

Peters  &  Stone  were  egg  dealers  in  Chicago.  On 
January  5, 1915  they  made  the  following  contract  with 
Jones  &  Company,  commission  merchants : 

Jan.  5,  1915. 
"We  promise  to  deliver  to  Jones  and  Company 
5000  dozen  eggs  (grade  "Best"),  to  be  paid  for 
at  the  price  of  15c  per  dozen,  ten  days  after 
delivery. 

(Signed)     Peters  &  Sons. 

Peters  &  Sons,  though  often  requested,  refused  to 
deliver  the  eggs.    Jones  and  Company  sued  for  breach 


CONTRACTS  93 

of  contract  and  Peters  &  Sons  claimed  the  contract 
was  void  because  no  definite  time  was  set  for  delivery. 
Is  the  defense  a  good  one? 

RULING  COURT  CASE 

Rattle  Long  vs.  Cornelius  Keedy,  Volume  71  Mary- 
land Reports,  Page  385;  Volume  5  Lawyer's  Reports 
Annotated,  Page  759. 

Cornelius  Keedy  was  the  principal  and  proprietor 
of  the  Hagerstown  Female  Seminary.  In  the  sum- 
mer of  1887,  being  desirous  of  securing  a  music 
teacher,  he  wrote  a  letter  to  Hattie  Long,  in  which  he 
said:  *'I  desire  to  engage  a  teacher  of  vocal  and  in- 
strumental music.  Salary  is  from  $300  to  $400 
and  home,  according  to  the  ability  of  the  teacher. '^ 
Miss  Long  immediately  answered,  stating  "that  she 
was  a  competent  teacher  of  music,  both  instrumental 
and  vocal,"  and  was  willing  to  accept  the  position  on 
the  terms  stated.  He  then  wrote  to  Miss  Long:  **  After 
due  reflection,  I  have  concluded  to  offer  you  the  posi- 
tion of  teacher  of  instrumental  and  vocal  music."  In 
this  letter  he  stated  that,  in  case  she  was  successful 
with  her  work,  that  she  might  be  re-engaged  for  the 
following  year  at  an  increased  salary.  He  also  stated 
that  her  salary  was  to  be  $400  with  room  and  board. 
Miss  Long  thereupon  replied,  accepting  the  offer  as 
stated  in  his  last  letter. 

After  she  had  served  in  the  capacity  of  teacher  for 
two  months,  she  was  discharged  by  Keedy  without 
just  cause.  She  thereupon  sued  for  damages  for  the 
breach  of  contract  of  employment.  ' 

It  was  contended  by  Keedy  that  it  was  a  contract 
of  employment  which  could  be  terminated  at  will,  be- 


94  CONTRACTS 

cause  it  was  no  where  stated  in  their  correspondence 
that  she  was  to  be  engaged  for  the  whole  school  year. 

Decision:  Although,  in  the  letters  between  Miss 
Long  and  Mr.  Keedy,  it  no  where  appeared  in  express 
words  that  she  was  to  be  employed  for  the  whole  year, 
yet  from  all  the  facts  it  clearly  appears  that  his  offer 
was  employment  for  the  whole  school  year.  The  sal- 
ary he  offered  her  was  for  the  whole  school  year,  and 
it  is  certain  that  he  intended  to  offer  her  employment 
on  the  same  basis.  This  is  a  reasonable  interpretation 
as  to  time. 

Accordingly,  it  was  held  that  Miss  Long  might  re- 
cover damages  for  the  wrongful  breach  of  her  contract 
of  employment. 

ETJLING  LAW 
Story  Case  Answer 

It  has  just  been  pointed  out  that  an  offer  should  be 
certain.  The  mere  fact  that  all  the  terms  are  not  ex- 
pressly stated  in  the  offer  does  not  make  it  uncertain, 
if  such  terms  are  clearly  implied..  If  a  stock  dealer 
were  to  offer  to  sell  one  hundred  shares  of  stock,  with- 
out mentioning  in  his  offer  the  price  he  wished,  and 
tMs  offer  were  accepted  by  the  offeree,  it  is  reasonable 
to  suppose  that  it  would  be  implied  that  they  were 
to  be  sold  at  the  market  price  of  such  stock. 

In  the  Story  Case,  the  time  for  delivery  would  be  im- 
plied as  meaning  within  a  reasonable  time.  Eggs  may 
not  be  kept  for  a  great  length  of  time  without  depreci- 
ating in  value,  hence  the  time  would  be  fairly  short. 
The  jury  would  determine  just  what  a  reasonable  time 
is.    The  defense  is  not  a  good  one. 


CONTRACTS  95 

b.    Usages  and  Customs  of  Trade 

STOEY  CASE 

Many  establishments  permit  2  per  cent  off  for  cash 
within  tliirty  days.  That  is,  if  the  goods  sent  per  con- 
tract are  paid  for  within  thirty  days,  a  discount  of  2 
per  cent  on  the  contract  price  is  allowed.  The  firm 
of  Gerald  &  Company,  boot  and  shoe  wholesalers,  for 
many  years  had  allowed  such  a  discount  to  their  cus- 
tomers. George  Gregg,  a  shoe  dealer,  sent  the  follow- 
ing letter  to  Gerald  and  Company. 

Jan.  1,  1915. 
Send  me  a  consignment  of  shoes  as  per  the  con- 
signment of  last  year,  price  to  be  the  same,  ta 
reach  me  by  January  10. 

(Signed)    George  Gregg. 

Gerald  &  Co.  sent  the  shoes  immediately  and  they 
reached  Gregg  on  January  9th.  There  was  no  stipu- 
lation for  discount  for  cash  in  the  present  case  or  in 
the  contract  of  last  year. 

On  January  19th,  Gregg  sent  a  draft  for  the  price 
of  the  shoes  minus  2  per  cent.  Gerald  &  Company  re- 
fused to  accept  the  draft  because  it  was  not  for  the  en- 
tire amount.  They  claimed  that,  since  there  was  no 
stipulation  for  discount,  Gregg  was  not  entitled  to  it. 

Gregg  answered  that  he  had  always  received  the  dis- 
count from  Gerald  &  Co.  and  that,  although  there  was 
no  stipulation  in  the  contract,  there  was  a  custom  in 
the  shoe  business  to  allow  the  discount  for  cash  within 
thirty  days. 

"Which  party  wins! 


96  CONTEACTS 

EULING  COURT  CASE 

Cunningham  vs.  Morningstar,  Volume  110  Indiana 
Reports,  Page  328;  Volume  59  American  Decisions, 
Page  211. 

During  the  season  of  1879-80,  Cunningham,  the 
plaintiff  in  this  action,  was  engaged  in  the  pork-pack- 
ing business  in  Martinsville,  Indiana.  Cunningham  of- 
fered to  advance  money  to  Morningstar,  if  the  latter 
would  purchase  and  deliver  fat  hogs  at  their  packing 
house.  Cunningham  offered  to  slaughter  the  hogs, 
prepare  them  for  market,  and  deliver  the  product  up 
to  Morningstar  upon  his  demand.  In  pursuance  of 
the  terms  of  the  agreement,  Cuningham  advanced 
about  $2,500  to  Morningstar;  with  this  and  other 
money,  Morningstar  purchased  some  2500  hogs  and 
delivered  them  to  Cunningham.  These  were  butchered 
and  prepared  for  market.  About  this  time  the  price 
of  meat  began  to  go  down ;  and  had  the  meat  then  been 
sold,  the  proceeds  would  have  scarcely  been  sufficient 
to  repay  Cunningham  the  money  by  him  advanced.  It 
was  decided  that  Cunningham  should  retain  the  meat 
a  while  longer,  and  that  Morningstar  should  give  a 
note  for  the  repayment  of  the  money  advanced  to  him. 
He  failed  to  pay  the  note  at  maturity,  and  Cunningham 
brought  this  action  upon  it. 

Morningstar  contended  that  he  was  not  liable  upon 
the  note  because  Cunningham  had  not  performed  the 
contract;  he  contended  that  Cunningham  had  mixed 
his  meat  with  all  the  meat  contained  in  his  packing 
plant ;  that  he  had  converted  a  part  of  the  same,  in  that 
he  had  kept  and  used  the  bristles,  feet,  fat  from  the 
entrails  and  other  offal.  In  reply  to  this,  Cunningham 
showed  that  it  was  the  custom  among  all  packers  to 


CONTRACTS  97 

retain  the  parts  referred  to,  as  compensation  for  butch- 
ering and  preparing  the  animals  for  market. 

Decision :  Although  nothing  was  said  in  their  con- 
tract by  which  Cunningham  was  to  retain  any  part  or 
parts  of  the  animals  slaughtered,  it  is  such  a  well  es- 
tablished custom  among  packers,  that  it  must  have 
been  understood  as  a  term  in  the  offer,  as  made  by  Cun- 
ningham. Such  being  the  case,  the  facts  set  up  by 
Morningstar  constitute  no  defense  to  the  action  upon 
the  note. 

The  Court  was,  therefore,  of  the  opinion  that  judg- 
ment upon  the  note  should  be  given  for  Cunningham. 

EULING  LAW 
Story  Case  Answer 

It  frequently  happens  that  one  party  to  a  contract 
or  the  other  may  set  up  some  custom  or  usage  of  trade 
to  add  a  new  term  to  the  contract,  or  to  give  a  particu- 
lar meaning  to  a  term,  or  to  make  clearer  some  term. 
As  in  the  case  of  Cunningham  vs.  Morningstar,  it  was 
permitted  to  be  shown  there  that  a  packer  was  entitled 
to  mingle  all  meat  together;  and  that  he  was  entitled 
to  retain  certain  parts  of  the  slaughtered  animals,  al- 
though nothing  was  said  in  the  contract  in  reference  to 
such  right.  But  where  such  a  custom  is  well  known  to 
both  parties,  under  similar  circumstances,  it  is  pre- 
sumed that  the  parties  intended  to  adopt  such  cus- 
toms and  usages  as  a  part  of  their  contract. 

In  order,  however,  that  such  customs  and  usages 
may  be  shown  to  this  purpose,  certain  requirements 
must  be  met.  The  custom  or  usage  must  have  been 
established  at  the  time  the  contract  was  made.  It 
must  have  been  well  known  custom  or  usage.  Such 
custom  must  not  be  in  conflict  with  any  rule  of  law. 


98  CONTEACTS 

Nor  can  it  be  in  conflict  with  any  express  term  of  the 
contract.  In  Cunningham  vs.  Morning  star,  had  it  ap- 
peared that  the  parties  expressly  agreed  that  those 
certain  parts  of  the  animals  were  not  to  be  retained  by 
the  packer,  of  course,  the  custom  would  have  had  no 
effect  on  the  contract. 

Thus,  in  the  Story  Case,  Gregg  is  entitled  to  his  dis- 
count. Since  there  was  a  well  established  custom  to 
allow  the  discount  in  question,  it  must  be  presumed 
that  they  intended  that  it  should  be  a  term  of  their 
contract. 


c.     Terms  on  a  Document  Unread  But  Known  to  Be 

There  by  the  Other  Party 

STOBY  CASE 

Mr.  Johnson  went  into  the  office  of  the  Western 
Union  Telegraph  Company  for  the  purpose  of  sending 
the  following  message : 

"J.  L.  Jenkins, 

Mobile,  Alabama. 
Purchase  all  cotton  possible  at  not  over  lO^^c. 
^  J.  W.  Johnson.'' 

The  agent  transmitted  the  message,  but  as  delivered 
to  Jenkins,  it  read:  *' Purchase  all  cotton  possible  at 
not  over  ll^^c."  The  latter  purchased  six  thousand 
bales  at  lll^c,  as  cotton  had  risen  rapidly  in  value 
within  the  previous  twenty-four  hours.  When  John- 
son learned  what  had  been  done  and  realized  that  he 
was  unable  now  to  dispose  of  the  cotton  at  a  profit,  he 
brought  suit  against  the  company  for  damages,  show- 
ing that  he  was  compelled  to  sell  the  cotton  in  question 
for  103^. 


CONTRACTS  99 

The  company  made  the  following  defense:  The 
agent  furnished  Jolmson  with  a  blank  which  contained 
the  word  '^over"  at  the  bottom,  and  informed  him  that 
there  were  certain  conditions  on  the  back  of  the  blank. 
But  Johnson  neglected  to  read  them.  One  condition 
maintained :  *'  That  the  company  will  not  be  liable  for 
damages  to  any  greater  amount  than  the  price  of  the 
telegram,  in  case  of  mistakes,  unless  the  sender  directs 
that  the  message  be  repeated." 

Is  that  a  term  of  their  contract? 

BUUNG  COURT  CASE 

Durgin  vs.  American  Express  Company j  Volume  66 
New  Hampshire  Reports,  Page  277.  ' 

On  the  20th  day  of  January,  1888,  an  agent  of  the 
American  Express  Company  received  from  Durgin  a 
box  weighing  thirty-seven  pounds ;  this  box  contained 
silverware,  which  amounted  in  value  to  $680.  It  was 
to  be  carried  by  the  company  to  a  person  in  New  York 
City.  •  Durgin  had  shipped  goods  with  the  American 
Express  Company  frequently  before  this  time.  He  had 
in  his  possession  blank  receipts  issued  by  the  company 
for  the  convenience  of  its  customers  and  patrons.  On 
the  back  of  this  blank  there  were  various  stipulations 
one  of  which  stated  that  the  company  would  not  be 
liable  for  the  loss  beyond  the  sum  of  $50,  unless  a 
different  valuation  was  placed  on  the  same  by  the 
shipper  at  the  time  of  shipment.  Durgin,  knowing 
that  the  company  based  the  rates  upon  the  valuation 
of  the  property  and  that  this  stipulation  was  on  the 
blank,  filled  it  out,  signed  it  and  delivered  it  to  the 
company  T\dth  the  goods  in  question.  During  the 
course  of  transit,  the  silverware  was  lost  or  stolen. 
The  company  was  willing  to  pay  only  fifty  dollars. 


100  CONTEACTS 

Thereupon,  Durgin  sued  for  the  full  value  of  the  prop- 
ert}^  lost. 

The  company  contended  that  he  could  not  recover 
more  than  $50,  because  the  terms  of  their  contract 
called  only  for  that  sum  in  case  of  loss.  Durgin 
claimed  that  he  was  not  bound  by  that  stipulation  be- 
cause he  never  assented  to  it,  although  he  knew  it  was 
on  the  blank  receipt. 

Decision:  The  Court  was  of  the  opinion  that  the 
stipulation  in  question,  which  was  known  to  Durgin 
when  he  shipped  his  goods,  became  a  part  of  the  con- 
tract, even  though  he  may  not  have  expressly  assented 
to  it.  He  knew  that  the  company  charged  for  carriage 
upon  the  basis  of  the  value  of  the  property,  and  he 
knew  that  the  rate  would  have  been  much  higher  had 
the  company  known  the  real  value  of  the  property; 
under  these  circumstances,  it  would  be  unjust  to  allow 
him  to  escape  the  effect  of  the  stipulation. 

Judgment  was  given  for  Durgin  for  the  sum  of  only 
$50. 

EULING  LAW 
Story  Case  Answer 

Many  companies,  especially  telegraph  and  express 
companies,  furnish  to  patrons  blank  forms  for  con- 
tracts of  service.  These  generally  contain  certain 
printed  conditions  either  on  the  back  or  on  the  face. 
Persons  frequently  know  that  there  are  terms  and  con- 
ditions printed  thereon,  but  neglect  to  read  them.  It 
becomes  an  important  question  to  know  just  how  far 
such  conditions  are  binding  upon  people  who  deal  with 
these  companies. 

In  the  first  place,  these  terms  must  be  such  that  they 
might  become  a  part  of  the  contract  if  the  parties  ex- 


CONTKACTS  101 

pressly  agreed  upon  them.  Assuming  that  they  are  of 
this  nature,  if  the  party  knows  of  their  existence  and 
has  read  them,  he  will  be  bound  by  them,  whether  or 
not  he  expressly  assented.  Also,  if  he  knows  that  there 
are  terms  and  conditions,  and  does  not  read  them,  he 
is  bound  by  them,  because  his  indifference  may  be  pre- 
sumed to  be  his  assent  or  agreement. 

In  the  Story  Case,  Johnson's  attention  was  directed 
to  the  fact  that  there  were  conditions,  both  by  the 
blank  form  itself,  as  w^ell  as  by  the  agent.  Neglecting 
to  examine  them,  he  will  be  bound  by  them,  even  though 
he  did  not  expressly  agree  to  them. 


d.    Terms  on  the  Document  Unknown  to  Be  There 

by  the  Other  Party 

8T0BY  CASE 

Mr.  Jacob  Filimore  of  South  Bend,  Indiana,  intend- 
ing to  go  to  Pittsburg,  purchased  a  ticket  from  the 
Lake  Central  Railway  Company,  on  the  15th  of  June, 
1914.  At  the  last  moment,  because  of  business  matters, 
he  was  unable  to  go.  Three  days  later,  however,  he 
boarded  the  train,  with  the  ticket  he  had  previously 
purchased.  When  he  presented  it  to  the  conductor  he 
refused  to  accept  it,  because  it  was  three  days  old.  On 
the  back  of  the  ticket  there  was  the  following  condi- 
tion: *'This  ticket  is  good  only  on  the  day  of  issu- 
ance. ' '  Below  this  was  stamped  the  date :  *  *  June  15, 
1914."  The  face  of  the  ticket  contained  no  words,  nor 
any  indication  that  there  was  any  writing  on  the  re- 
verse side  thereof.  Mr.  Filmore  stated  that  he  was 
not  aware,  moreover,  that  there  was  any  such  condition 
thereon. 

Is  this  condition  a  part  of  their  contract  I 


102  CONTRACTS 

BnUNG  COUBT  CASE 

Tichnor  vs.  Hart,  Volume  52  Minnesota  Reports, 
Page  407 ;  Volume  54  North  Western  Reporter,  Page 
369. 

Tichnor  was  preparing  to  publish  a  book  of  "Amer- 
ican Biography  of  Eepresentative  Men.'*  Hart  be- 
came a  subscriber  therefor,  by  a  written  contract. 
Hart  promised  that  he  wotild  pay  a  certain  price  there- 
for when  it  was  published  and  delivered  to  him.  In  the 
course  of  time  the  book  was  published,  but  Hart  re- 
fused to  accept  or  pay  for  his  copy  of  the  book.  Tich- 
nor, thereupon,  brought  this  action  for  the  recovery  of 
the  price  agreed  upon. 

In  defense  to  the  action,  Hart  contended  that  the 
prospectus  issued  by  Tichnor  contained  a  promise  that 
this  work  would  contain  able  contributions  of  local  in- 
terest by  distinguished  local  scholars  and  scientists, 
and  that,  as  a  matter  of  fact,  the  work  as  published  con- 
tained no  such  contributions.  It  was  shown,  on  the 
other  hand,  that  Hart  did  not  know  about  this  proposal 
at  the  time  he  made  the  contract,  although  he  had  a 
copy  of  the  prospectus,  and  knew  that  it  contained  a 
full  detailed  description  of  the  work ;  and  it  was  there 
that  the  proposal  was  contained  upon  which  Hart 
relies  as  a  defense. 

Decision :  The  Court  held  that  this  was  no  part  of 
the  contract  because  he  knew  nothing  of  it  when  he  ac- 
cepted the  offer.  Only  those  terms  of  an  offer,  which 
are  Imown  to  the  party  accepting  the  contract,  become 
a  part  of  the  contract.  Terms  df  the  offer  which  are 
unknown  to  him  are  as  if  they  never  existed. 

Accordingly,  judgment  was  given  for  Tichnor. 


CONTRACTS  103 

BULINa  LAW 
Story  Case  Answer 

We  have  just  seen  that  if  a  party  knows  that  a  given 
document  contains  terms  and  conditions,  whether  on 
the  back  or  face,  he  will  be  bound  by  those  conditions, 
even  though  he  may  not  know  the  contents  of  the  con- 
ditions, and  consequently  has  not  expressly  agreed  to 
them.  But  it  would  be  manifestly  unfair  to  a  person  to 
hold  him  to  conditions  upon  a  document  if  he  were  un- 
aware of  their  existence,  and  were  not  negligent  in  not 
ascertaining  them.  Thus,  when  a  person  takes  a  docu- 
ment, which  contains  a  complete  contract  on  its  face, 
he  is  not  bound  by  conditions  on  the  back  thereof,  un- 
less in  some  manner  it  is  made  evident  to  him  that 
such  conditions  exist,  and  are  intended  to  be  and  be- 
come part  of  their  contract. 

In  the  Story  Case,  Filimore  was  not  aware  that  the 
reverse  side  of  his  ticket  contained  any  condition  which 
was  intended  to  be  a  part  of  the  contract ;  therefore  he 
is  not  bound  by  the  same.  It  is  interesting  to  note  that 
railroads  now  are  careful  to  point  out  all  terms  on  the 
reverse  side  of  a  ticket  or  document. 


e.    Terms  Not  Readily  Discernible 
STORY  CASE 

Henry  Story  bought  a  horse  from  the  Sioux  City 
Horse  fair,  a  corporation.  The  agent  of  the  corpor- 
ation misrepresented  the  intrinsic  worth  of  the  animal 
so  that  Story  lost  $100  in  the  transaction.  For  this 
loss  he  brought  an  action  for  breach  of  contract  against 
the  company.  The  horse  fair  put  in  defense  that  it 
was  not  liable  for  the  misrepresentation  of  agents  be- 
cause it  had  expressly  guarded  itself  against  this  by 


104  CONTRACTS 

provisions  in  the  contract.  It  was  shown  in  evidence 
that  the  company  had  this  sign  posted  in  the  auction 
room  **  Agents  Representations  N.  P.  C."  and  that  the 
same  words  and  letters  were  also  in  the  bill  of  sale.  It 
was  explained  that  this  meant:  *' Agents  Representa 
tions  Are  No  Part  of  the  Contract. ' '  Story  maintained 
that  these  abbreviations  had  no  meaniag  to  him  and, 
therefore,  were  not  a  part  of  the  contract.  For  whom 
should  judgment  be  given? 

BUUNG  COUBT  0A8E 

Bosenfeld  vs.  Peoria,  Decatur,  &  Evansville  Railway 
Company,  Volume  103  Indiana  Reports,  Page  121 ;  Vol- 
ume 53  American  Reports,  Page  500. 

Rosenfeld  delivered  to  the  railway  company  a  bar- 
rell  of  whiskey  to  be  shipped  to  James  O'Brien,  who 
lived  at  Litchfield,  Illinois.  The  bill  of  lading  issued 
therefor,  contained  a  statement  of  the  name  and  resi- 
dence of  the  person  to  whom  it  was  shipped,  and  a 
description  of  the  article,  as  ''1  barrel  of  whiskey  of 
400  pounds  weight.''  Following  these  statements 
there  was  a  blank ;  this  blank  was  followed  by  certain 
printed  stipulations,  one  of  which  read :  ' 'In  the  event 
of  loss  or  damage  under  the  provisions  of  this  agree- 
ment, the  value  or  cost  at  the  point  of  shipment  shall 
govern  the  settlement  of  the  loss. ' ' 

The  whiskey  was  lost  in  transit,  and  this  action  was 
brought  to  recover  damages  therefor.  The  defendant 
company  set  up  the  following  defense:  In  the  blank 
above  referred  to,  an  agent  of  the  company  had  in- 
serted the  following:  *'L  &  0  ex  $20  R.  R.  Valua- 
tion." This  notation  meant  that  the  company  did 
not  intend  to  be  liable  for  leaks  and  outs,  and  that 
$20  was  the  maximum  amount  of  loss  which  they 


\ 


CONTEACTS  105 

would  indenmify.  This  abbreviated  notation  was  il- 
legible and  not  easily  discernible  to  the  ordinary  per- 
son reading  it. 

Decision:  This  memorandxun,  as  inserted  by  the 
agent  of  the  company,  does  not  constitute  a  part  of 
the  contract  between  the  company  and  Rosenf  eld.  Al- 
though it  was  contained  in  the  body  of  their  agreement, 
it  conveyed  no  meaning  to  Kosenf  eld ;  and  he  could  not 
have  assented  to  it.  Therefore,  he  is  not  bound  by  the 
statement  in  the  notation. 

Judgment  was  given  for  Rosenfeld  for  the  full  loss. 

EUUNG  LAW 
Story  Case  Answer 

One  party  to  a  contract  cannot  take  advantage  of  the 
other  by  inserting,  in  the  contract,  terms  which  are  not 
readily  discernable.  The  statements  in  a  writing  must 
be  understood  by  both  parties,  or  must  be  sufficiently 
clear  to  be  intelligible  to  all  parties,  if  an  effort  is  made 
to  understand  them.  The  answer  of  the  Sioux  City 
Horse  Fair  Company,  in  the  Story  Case,  is  not  a  good 
defense,  because  the  terms  by  which  it  intended  to 
protect  itself  were  not  knoTVTi  to  Story  and  the  abbrevi- 
ations in  the  contract  were  not  intelligible  without  ex- 
planation. 


f.    Terms  Issued  in  a  General  Notice 
STOBY  CASE 

Hakins,  an  auctioneer,  caused  signs  to  be  put  up  in 
his  rooms  which  read : 

** Notice!  Terms  are  Cash." 

Thomas  bid  in  a  horse  for  $200,  and  when  he  pro- 
posed taking  the  horse  away,  he  offered  to  give  his 


N 


106  CONTRACTS 

note  for  the  amount.  Hakins  refused  to  take  a  note 
and  showed  the  signs.  Thomas  answered : 
'*  Yes,  I  saw  the  signs  but  I  never  pay  cash.'* 
Hakins  asserted  that  he  never  sold  for  anything  but 
cash.  Whereupon,  Thomas  refused  to  take  the  horse. 
Hakins  sued  him  for  breach  of  contract  to  buy  and  pay 
cash  for  the  horse. 

Thomas  defends,  on  the  grounds  that  the  signs  were 
made  to  the  public,  not  to  him  personally.  Is  the  de- 
fense good? 

EULINO  COURT  CASE 

Eollister  vs.  Nowlen,  Volume  19  Wendell's  New 
York  Reports,  Page  234;  Volume  32  American  De- 
cisions, Page  455. 

Nowlen  was  the  proprietor  of  a  stage  coach  line  run- 
ning between  certain  points  in  the  state  of  New  York. 
He  caused  to  be  printed  certain  notices,  to  the  effect 
that  all  baggage  would  be  carried  at  the  risk  of  the 
owner.  Copies  of  this  notice  were  posted  in  the  stage 
office,  and  in  all  public  houses  along  the  coach  line. 
HolUster,  on  July  20,  1833,  left  Avon  for  Buffalo  on 
Nowlen 's  coach,  with  his  trunk  fastened  to  the  back  by 
a  rope.  After  proceeding  about  three  miles,  it  was 
found  that  the  rope  had  been  cut  and  that  the  trunk 
and  its  contents  had  been  stolen.  Thereupon,  Hollister 
sued  to  recover  the  value  of  the  trunk  and  its  contents. 

The  defense  of  the  defendant,  Nowlen,  consisted  in 
the  fact  that  the  public  notice  became  a  term  in  his 
offer  to  carry  the  public  on  his  coach;  and  that  Hol- 
lister was  bound  by  its  provisions.     . 

Decision :  Such  a  general  notice  as  this,  if  made  evi- 
dent to  the  public,  might  be  considered  a  term  in  a 


CONTRACTS  107 

contract  in  ordinary  cases ;  but  in  the  case  of  common 
carrier,  where  an  extraordinary  liability  exists,  such 
a  general  notice  does  not  constitute  a  part  of  the  con- 
tract of  carriage,  unless  it  is  expressly  assented  to  by 
the  passenger. 

Mr.  Justice  Bronson  said  in  part:  **The  argument 
is  that  where  a  party  delivers  goods  to  be  carried,  af- 
ter seeing  a  notice  that  the  carrier  intends  to  limit 
his  responsibility,  his  assent  to  the  terms  of  the  notice 
may  be  implied.  But  this  argument  entirely  overlooks 
a  very  important  consideration.  Notwithstanding  the 
notice,  the  owner  has  a  right  to  insist  that  the  carrier 
shall  receive  the  goods  subject  to  all  the  responsibility 
incident  to  his  employment.  If  a  coat  be  ordered  from 
a  tailor,  after  he  has  given  the  customer  notice  that  he 
will  not  furnish  the  article  at  a  less  price  than  $100,  the 
assent  of  the  customer  to  pay  that  sum,  though  it  be 
double  the  value,  may  perhaps  be  implied.  But  if  the 
tailor  had  been  under  a  legal  obligation,  not  only  to 
furnish  the  coat,  but  to  do  so  at  a  reasonable  price, 
no  such  implication  arises.  He  has  no  right  to  pre- 
scribe any  other  terms;  and  a  notice  can,  at  most, 
amount  to  a  proposition  for  a  special  contract,  which 
requires  the  express  assent  of  the  other  party." 

Judgment  was  given  for  HoUister  in  this  action. 

.  BnUNG  LAW 

Story  Case  Answer 

A  term  or  condition  may  become  a  part  of  a  contract 
when  made  publicly,  if  it  can  be  shown  that  the  party 
affected  thereby,  knew  or  should  have  known  of  its 
existence.  In  the  case  of  HoUister  vs.  Nowlen  the 
Court  was  of  the  opinion  that  such  a  notice  must  be 


108  CONTEACTS 

definitely  asserted  to  the  party,  in  order  that  a  com- 
mon carrier  might  limit  its  liability.  But,  in  general, 
a  public  notice  will  be  binding  upon  persons  unless 
they  can  show  that  they  were  not  informed  of  it,  and 
had  no  means  of  discovering  it. 

In  the  Story  Case,  Thomas  would  lose.  He  had  notice 
of  the  requirement  for  cash  before  he  bid  on  the  horse. 
When  the  notice  reached  him  it  became  part  of  the 
offer  to  sell  to  the  highest  bidder.  Hence,  by  accepting 
the  offer  of  sale  by  bidding  highest,  he  accepted  the 
stipulation  of  the  offer, — ^namely  that  cash  was  re- 
quired. 


g.    Terms  Stipulated  After  the  Agreement  Is  Made 
STORY  CASE 

Harvey  &  Company  had  entered  into  a  contract  to 
sell  Mr.  Good  a  consignment  of  hemp  ' '  to  be  delivered 
July  30,  1914.'*  On  July  15, 1914,  Harvey  &  Co.  real- 
ized that  they  would  be  unable  to  deliver  the  hemp  at 
that  date  and  requested  an  extension  of  time.  Mr. 
Good  said : 

**I  am  in  no  hurry  for  the  hemp.    If  you  get  it 
to  me  by  the  first  of  October,  it  Avill  be  all  right. '  * 

On  October  1,  Harvey  &  Co.  delivered  the  hemp 
to  Mr.  Good,  who  refused  to  accept  and  said  that  he 
intended  to  sue  them  for  failure  to  deliver  on  July 
30.  Harvey  &  Co.,  unable  to  find  a  buyer  for  the 
hemp,  on  October  15,  sued  Good  for  refusing  to  accept 
the  shipment. 

ifrGood  defended  on  the  ground  that,  since  Harvey  & 
Co.  did  not  deliver  on  July  30th,  the  contract  was 
terminated  and  he  was  released  from  performing  his 


CONTRACTS  109 

promise.    Harvey  &  Co.  answered  that  he  waived  the 
delay  when  they  made  this  request  on  July  15th. 
Which  party  should  win? 

SXTLING  COURT  CASE 

Dale  vs.  See,  Volume  51  New  Jersey  Law  Reports, 
Page  378;  Volume  14  American  State  Reports,  Page 
583. 

Dale  was  a  manufacturer  of  silk  braid  in  the  city 
of  Paterson  and  See  was  a  silk  dyer.  Dale  sent  silk 
to  See  to  be  dyed.  No  special  contract  for  the  work 
was  entered  into,  but  Dale  relied  on  the  usual  implied 
contract  of  dyers  to  use  the  proper  degree  of  care  and 
skill.  The  twist  was  received  by  Dale,  after  See  had 
finished  dyeing  it,  and  was  woven  into  silk  braids.  Sev- 
eral months  later.  Dale  found  that  these  braids  were 
of  greatly  inferior  quality  and  value;  they  were  oily 
on  account  of  the  unskillful  dyeing  by  See.  Thereupon, 
Dale  brought  this  action  to  recover  damages  caused 
by  the  unskillful  work. 

See  set  up  the  defense  that,  with  each  part  of  the 
silk  which  was  returned  to  Dale,  a  notice  was  sent 
which  provided:  *'A11  claims  for  deficiency  or  dam- 
age must  be  made  within  three  days  from  date ;  other- 
wise such  claims  will  not  be  allowed. '  * 

Decision:  This  stipulation  made  by  See  was  made 
too  late  to  become  a  part  of  the  contract;  their  con- 
tract was  complete  when  Dale  delivered  the  goods  to 
him  to  be  dyed.  Consequently,  a  subsequent  stipula- 
tion is  not  a  term  of  the  contract  and  is  no  defense  to 
this  action. 

Mr.  Justice  Depue  said  in  part:  *'Upon  a  bailment 
of  goods  for  work  and  labor  upon  them,  the  contract 


no  CONTEACTS 

between  the  parties  arises  immediately  npon  the  de- 
livery of  the  goods  to  the  bailee,  and  npon  the  com- 
pletion of  the  work  for  which  the  bailment  was  made, 
it  is  the  duty  of  the  bailee  to  return  the  goods  to  the 
owner.  He  cannot  after  having  received  them  on  one 
agreement  prescribe  the  conditions  under  which  he 
will  perform  that  duty.  Notice  by  the  bailee,  with  the 
return  of  the  goods,  or  with  his  bill  for  the  work  done, 
qualifying  his  liability  for  defective  workmanship,  are 
terms  of  his  own  dictation.  His  refusal  to  restore  the 
goods  to  the  owner,  except  upon  those  terms,  would  be 
wrongful;  and  although  the  owner  should  accept  his 
goods  with  knowledge  of  the  terms  proposed,  no  con- 
tract would  arise  therefrom.  The  transaction  would 
lack  the  consideration  necessary  to  support  a  contract. 
Accordingly,  it  was  decided  that  Dale  might  recover 
his  damages  in  this  action. 

BUUNG  IiAW 
Story  Case  Answer 

When  the  parties  to  a  contract  have  reached  a  final 
agreement,  it  is  assumed  that  they  have  satisfied  all 
the  contingencies  and  conditions  which  they  wish  to 
consider.  Thereafter,  neither  party  has  the  right,  with- 
out the  consent  of  the  other,  to  stipulate  for  new  con- 
ditions,— or  impose  new  terms.  Such  a  right  would 
be  very  unjust  to  either  party  because  neither  would 
be  certain  as  to  the  exact  meaning  of  his  contract.  In 
the  case  of  Dale  vs.  See,  for  instance,  the  contract  be- 
tween the  two  parties  was  complete,  when  the  silk 
twist  was  delivered.  If  See  wished  to  provide  that 
claims  for  damages  and  deficiencies  were  to  be  made 
within  a  certain  time,  he  should  have  provided  for  that 
when  the  contract  was  made.    He  certainly  had  no 


CONTEACTS  HI 

right  to  attempt  to  make  that  condition  a  part  of  the 
contract,  after  the  contract  was  closed. 

In  the  Story  Case,  the  new  conditions  were  not  arbi- 
trarily imposed  upon  Good;  when  they  were  stipu- 
lated he  was  not  compelled  to  assent  to  them,  and  had 
a  good  cause  of  action  against  Harvey  and  Company 
for  failure  to  deliver.  He  did,  however,  voluntarily 
assent  to  the  new  conditions,  and,  thereupon,  these  be- 
came a  part  of  the  contract.  Good's  defense  will  not 
hold. 


(8)     An  Agreement  to  Hold  an  Offer  Open  Is  an  Option 
STOEY  CASE 

Henry  Mock  wished  to  buy  some  horses  which  John 

Armstrong  desired  to  sell.    But  Mock  had  not  entirely 

decided  whether  he  should  buy  one  or  two  teams.    On 

Thursday,  in  a  conversation  with  Armstrong,  he  said, 

**I  do  not  know  just  what  I  want  to  do  yet.    Will 

you  hold  the  proposition  open  till  Saturday?" 

Armstrong  replied,  that  he  would  not  sell  the  teams 
until  he  heard  from  Mock,  provided  he  would  promise 
to  buy  at  least  one  team.  Mock  promised  definitely 
to  buy  the  gray  team  and  perhaps  the  blacks.  On  Fri- 
day, Armstrong  sold  the  teams  for  a  higher  offer  than 
Mock's.  On  Saturday,  Mock  told  Armstrong  that  he 
had  decided  to  buy  both  teams.  When  he  learned  that 
the  teams  were  sold,  he  brought  suit  against  Arm- 
strong for  breaking  his  contract  to  keep  the  horses  un- 
til Saturday. 

Armstrong  replied,  that  the  promise  was  only  an 
option  which  is  revocable  at  will.  Is  this  a  good  de- 
fense? 


112  CONTRACTS 

RULING  COURT  CASE 

Ide  vs.  Leiser,  Volume  10  Montanta  Reports,  Page 
5;  Volume  24  American  State  Reporter,  Page  17. 

Leiser  was  the  owner  of  certain  land.  On  September 
24,  1889,  he  agreed  in  writing  to  give  Ide  the  sole 
right  to  purchase  that  land  for  $1,000,  if  the  latter 
chose  to  exercise  the  right  within  ten  days  from  the 
date  of  the  agreement.  This  agreement  recited  that 
Ide  had  paid  Leiser  $1  for  this  right  to  buy  within 
the  ten  days,  as  mentioned  above.  Ide  did  not  exercise 
the  right  within  the  ten  days  from  the  date  of  the 
agreement.  By  a  subsequent  memorandum  noted  on 
the  original  agreement,  Leiser  stated:  "I  hereby  ex- 
tend the  above  option  for  a  period  of  ten  days. ' '  Be- 
fore the  ten  days  had  passed,  Leiser  withdrew  his  offer. 
Ide  at  once  attempted  to  accept  the  offer  under  the 
terms  of  the  option,  but  Leiser  refused  to  comply  and 
to  make  the  conveyance.  Thereupon,  Ide  brought  this 
suit. 

The  defense  of  Leiser  consisted  in  the  fact  that  the 
agreement  to  extend  the  time,  within  which  Ide  might 
purchase  the  land,  was  without  consideration  and  not 
binding  upon  him;  therefore,  no  damages  can  be  re- 
covered for  liis  failure  to  convey  the  land. 

Decision :  An  offer  may  be  withdrawn  at  any  time 
before  it  is  accepted.  But  if  the  offeror  agrees  for  a 
consideration  to  hold  an  offer  open  for  a  given  length 
of  time,  he  may  not  withdraw  it  before  that  time.  Such 
an  agreement  to  hold  an  offer  open  is  an  option.  But  if 
the  agreement  is  not  supported  by  a  consideration,  the 
offeror  may  withdraw  it,  notwithstanding  his  promise, 
and  the  person  to  whom  he  made  the  offer  has  no  right 
to  damages  for  its  withdrawal.   In  this  case,  the  agree- 


CONTEACTS  113 

ment  to  extend  the  time  within  which  it  might  be  ac- 
cepted, was  misupported  by  any  consideration,  and 
might  be  withdrawn  at  any  time  by  the  offeror.  Hav- 
ing been  withdra"v\Ti  before  the  offer  was  accepted,  Ide 
cannot  claim  any  damages. 

Therefore,  judgment  was  given  for  the  defendant, 
Leiser. 

EULING  LAW 
Story  Case  Answer 

If  one  person  gives  a  consideration  to  another  for 
his  promise  to  hold  an  offer  open,  the  relationship 
amounts  to  a  completed  contract  at  that  moment,  called 
an  option.  The  contract  consists  of  terms  whereby  one 
party  agrees  to  enter  into  another  contract  if  the  other 
party  chooses  to  do  so  at  a  subsequent  date. 

In  the  Story  Case,  Mock,  by  promising  to  buy  the 
gray  team,  gave  a  consideration  in  return  for  Arm- 
strong's promise  or  option  to  hold  the  proposition 
open.  Therefore,  Armstrong  could  not  legally  with- 
draw his  option  until  Saturday.  An  option  is  not  re- 
vocable at  will  when  the  other  party  gives  a  considera- 
tion for  it.  Therefore,  the  defense  in  the  Story  Case 
is  ineffective. 


(9)     An  Offer  Terminates 

a.     By  Merger  Into  Contract 

STOEY  CASE 

Whelpley  and  Keefe  Brothers  were  negotiating  by 
mail  for  the  sale  of  a  carload  of  brick.  On  February 
3,  1915,  Keefe  Brothers  made  the  following  offer  to 
Whelpley  by  mail : 


114  CONTRACTS 

**We  will  sell  yon  the  carload  for  $17.50  per 
thousand/' 

This  reached  Whelpley  on  the  4th  and  he  immediate- 
ly mailed  an  acceptance.  On  the  evening  of  the  4th, 
Keefe  Brothers  telegraphed  a  revocation  of  the  offer 
which  was  not  received  until  after  the  acceptance  was 
mailed.  The  acceptance  reached  Keefe  Brothers  in 
due  course  on  the  5th. 

Keefe  Bros,  refused  to  deliver  the  bricks,  on  the 
ground  that  they  revoked  the  offer  before  it  was  ac- 
cepted. Whelpley  sued,  however,  claiming  that  the 
offer  was  accepted  upon  the  mailing  of  the  letter  of  ac- 
ceptance ;  and  that,  as  soon  as  an  offer  is  accepted,  it 
becomes  a  contract  and  then  can  be  terminated  only 
by  mutual  consent.    Which  should  win? 

ETJUNG  COUET  CASE 

The  Boston  &  Blaine  Railway  Company  vs.  Bartlett, 
Volume  3  Gushing' s  Massachusetts  Reports,  Page  224. 

Bartlett  was  the  owner  of  certain  land,  located  in  the 
city  of  Boston.  On  the  first  day  of  April,  1844,  Bart- 
lett, in  writing,  agreed  to  convey  the  land  to  the  Boston 
&  Maine  Railway  Company  for  the  sum  of  $20,000,  if 
the  latter  so  desired  and  requested  within  thirty  days 
from  the  date  of  the  agreement.  This  agreement  was 
extended  thirty  days  from  the  first  of  May,  under  a 
similar  offer.  On  the  29th  day  of  May,  while  this  offer 
was  in  force  and  unrevoked,  the  company  elected  to 
purchase  the  land  at  the  price  named.  They  notified 
Bartlett  of  their  desire  and  offered  him  the  money 
therefore.  Bartlett,  thereupon,  stated  that  he  had  de- 
cided not  to  convey  the  land  for  that  price,  and  refused 
to  consider  the  offer.  The  company  brought  this 
action. 


CONTRACTS  115 

Bartlett  contended  that  there  was  no  consideration 
for  his  offer ;  and  that  an  acceptance  by  the  company, 
even  before  it  was  withdrawn,  did  not  make  a  binding 
contract. 

Decision :  Although  an  offer,  unsupported  by  a  con- 
sideration, may  be  withdrawn  by  the  person  making  it, 
at  any  time  before  it  has  been  accepted ;  nevertheless, 
if  it  is  accepted  before  it  is  withdrawn,  the  offer  dis- 
appears and  there  results  a  binding  contract  between 
the  parties.  In  this  case,  the  offer  was  so  accepted,  and 
a  binding  contract  resulted. 

Mr.  Justice  Fletcher,  in  the  course  of  his  opinion, 
said :  ' '  In  the  present  case,  though  the  writing  signed 
by  the  defendant  was  but  an  offer,  and  an  offer  which 
might  be  revoked,  yet  while  it  remained  in  force  and 
unrevoked,  it  was  a  continuing  offer  during  the  time 
limited  for  acceptance ;  and,  during  the  whole  of  that 
time,  it  was  an  offer  every  instant ;  but  as  soon  as  it 
was  accepted,  it  ceased  to  be  an  offer  merely  and  then 
ripened  into  a  contract.  When  the  offer  was  accepted, 
the  minds  of  the  parties  met,  and  the  contract  was  com- 
plete. There  was  then  the  meeting  of  the  minds  of  the 
parties,  which  constitutes  and  is  the  definition  of  a 
contract.'' 

Accordingly,  judgment  was  given  for  the  Boston  & 
Maine  Railway  Company. 

BXTLINa  LAW 

Story  Case  Answer 

An  offer  may  terminate  in  several  ways.  It  will 
terminate  when  the  offeree  accepts  it ;  it  then  becomes 
merged  into  the  contract.  The  offer  and  acceptance 
make  the  contract.    If,  then,  the  offer  disappears  when 


116  CONTRACTS 

accepted,  it  follows,  of  course,  that  the  offeror  cannot 
thereafter  revoke  the  offer. 

Thus,  in  the  Story  Case,  an  acceptance  of  the  offer 
of  Keefe  Brothers  was  made  before  he  attempted  to 
revoke  it.  Immediately  upon  acceptance,  the  offer 
merged  into  the  contract,  and  therefore,  could  not  be 
withdrawn  by  Keefe  Brothers. 


b.    By  Expiration  of  the  Time  Designated 
STORY  CASE 

Hays  owned  a  fine  racing  horse  which  he  wished  to 
sell  at  once.    He  made  this  offer  to  Brown  by  mail : 

"I  will  sell  'Bess'  to  you  for  $1,000  if  you  will 
apprise  me  of  your  decision  by  tomorrow.'' 

Two  days  later  Brown  sent  this  telegram : 

''Will  take  Bess.  Was  away  when  your  offer 
arrived. ' ' 
But  when  Hays  received  this  telegram  he  had  al- 
ready sold  the  horse.  Brown  sued  him,  alleging  that 
there  was  a  contract  betw^een  Hays  and  himself,  and 
that  he  had  accepted  the  offer  as  soon  as  circumstances 
admitted.    Do  you  think  that  Brown  should  win? 

RULING  COURT  CASE 

Home  vs.  Niver,  Volume  168  Massachusetts  Reports, 
Page  4. 

Niver,  who  was  a  dealer  in  coal,  doing  business  in 
Salem,  on  July  17,  1895,  wrote  a  letter  to  Home,  of- 
fering "A  very  low  figure  on  a  small  lot  of  our  Colum- 
bia coal  from  Salem."  The  letter  continued:  "We 
beg  to  quote  you  $2.50  on  cars  at  that  place,  and  should 


CONTEACTS  117 

yon  deem  it  wise  to  favor  us  with  an  order  of  five  to  six 
hundred  tons,  kindly  wire  us  at  our  expense  on  receipt 
of  this."  On  July  19,  Home  replied,  ordering  four  hun- 
dred tons.  In  the  meantime,  Niver  had  sold  the  small 
lot  of  coal  which  he  had  offered  at  this  price.  There- 
upon, Home  sued  for  damages. 

The  defense  set  up  by  Niver  consisted  in  the  fact 
that  the  acceptance  of  the  offer  came  too  late. 

Decision:  When  a  person  makes  an  offer  and  sets 
no  time  in  which  it  must  be  accepted,  the  offer  will  ex- 
pire within  a  reasonable  time.  But,  if  he  states  in  his 
offer  that  it  must  be  accepted,  if  at  all,  within  a  certain 
date,  unless  it  is  accepted  within  the  time  stipulated, 
the  offer  expires  when  that  time  has  elapsed.  Thus,  in 
this  case,  Niver  stated  that  it  must  be  accepted  on  re- 
ceipt of  the  offer.  But  Home  delayed  a  day  or  more 
before  he  decided  to  accept ;  the  result  was  that,  when 
he  did  accept,  the  offer  was  no  longer  open  to  him  and 
his  acceptance  of  no  effect. 

Therefore,  judgment  was  given  for  Home  in  this 
case. 

BULING  LAW 
Story  Case  Answer 

It  is  the  right  and  privilege  of  the  offeror  to  contract 
on  terms  and  conditions  suitable  to  himself.  Thus,  he 
may  expressly  state  that  he  is  willing  to  enter  into  a 
contractual  relation  only  in  case  the  offeree  is  willing 
to  accept  his  offer  within  any  given  period  of  time.  If 
he  so  designates  the  time,  the  offeree  must  accept  with- 
in that  time,  or  the  offer  is  gone,  and  he  cannot  there- 
after accept.  The  mere  fact  that  the  offeree  is  away 
from  home  when  the  offer  comes  is  not  material ;  that 


118  CONTRACTS 

is  his  misfortune;  the  offer  terminates  at  the  time 
specified,  nevertheless. 

Thus,  in  the  Story  Case,  the  acceptance  of  Brown 
was  too  late.  It  was  his  misfortune  that  he  was  away 
from  home  when  the  offer  arrived. 


c.     If  No  Time  Is  Designated,  an  Offer  Terminates 

Within  a  Reasonable  Time 

STOEY  CASE 

Thomas  Piatt  made  the  following  offer  to  the  ship- 
pers firm  of  Thiom  and  Co. : 

"Oct.  5, 1914. 

I  will  sell  yon  the  brig  *  Nancy'  for  $300,000. 

(Signed)  Thomas  Platt." 

Thiom  &  Co.  made  no  reply  to  this  offer  until  Febru- 
ary 13  of  the  following  year ;  then  they  wrote  accept- 
ing the  offer.  Piatt  immediately  answered  that  he  had 
waited  for  their  acceptance  for  some  time  and  that  he 
had  then  sold  the  vessel.  Thiom  &  Co.  sued  Piatt  for 
breach  of  contract  to  sell  them  the  ''Nancy''  and  Piatt 
defends,  on  the  grounds  that  his  offer  terminated  after 
a  reasonable  time,  without  express  revocation  on  his 
part. 

Do  you  think  that  his  defense  is  good! 

RULING  COURT  CASE 

Park  vs.  Whitney,  Volume  148,  Massachusetts  Re- 
ports, Page  278. 

William  Park  was  the  owner  of  stock  in  the  Equit- 
able Water  Meter  Company.  On  May  16,  1884,  Henry 
Whitney  wrote  a  letter  to  Park,  which  contained  the 


CONTRACTS  119 

following  offer :  *  *  As  your  possible  losses  on  the  meter 
business  are  a  source  of  anxiety  to  you,  I  will  give  you 
my  guaranty  to  take  the  meter  stock  from  you  at  cost, 
without  interest,  at  any  time  after  January  1, 1886,  if 
at  that  time  you  desire  me  to  do  so.*' 
To  this  offer,  Park  sent  the  following  letter  in  reply : 

''July  8,  1886. 
Dear  Sir: 

As  I  desire  to  dispose  of  my  interest  in  tlin 
Equitable  Water  Meter  Company,  I  hereby  accept 
your  proposal  of  May  16, 1884,  to  take  it  from  me 
at  cost,  without  interest. 

Respectfully, 

William  Park.*' 

Whitney  refused  to  buy  the  stock;  Park  thereupon 
brought  this  action  for  damages.  Whitney  defended 
that  the  offer  was  not  accepted  within  a  reasonable 
time. 

Mr.  Justice  Allen  delivered  the  opinion  of  the  court, 
in  which  he  said :  * '  In  the  first  place,  considering  the 
nature  of  the  offer,  and  the  circumstances  as  shown  in 
the  letter,  the  plaintiff  must  have  known  his  acceptance 
by  January  1, 1886.  The  words  'at  that  time'  mean 
the  same  as  'at  that  date.'  But  if  that  is  not  the 
true  construction,  at  least  the  offer  must  be  accepted 
within  a  reasonable  time  after  that  date.  Plainly  the 
offer  was  not  to  continue  forever.  The  words  "at  that 
time"  do  not  import  perpetuity;  and  if  not,  then  the 
plaintiff  was  entitled  to  a  reasonable  time ;  and,  there 
being  no  facts  in  dispute,  this  was  to  be  determined  by 
the  court.  There  was  no  acceptance  within  a  reason- 
able time." 

Therefore,  judgment  was  given  for  Whitney. 


120  CONTRACTS 

BULINa  LAW 
Story  Case  Answer 

Suppose  that  a  person  makes  an  offer  and  makes  no 
provision  concerning  the  time  within  which  an  accept- 
ance is  expected  or  must  be  made.  Does  such  an  offer 
continue  until  it  has  been  revoked  by  the  one  making 
it?  Unless  it  is  accepted  within  a  reasonable  time 
after  it  is  made,  it  lapses ;  it  is  no  longer  of  any  force 
and  effect  as  an  offer.  What  constitutes  a  reasonable 
time  must  be  determined  by  the  circumstances  of  each 
case.  If  a  person  offers  to  sell  a  farm;  to  say  that 
the  offer  continued  for  six  months  thereafter  might  not 
be  unreasonable.  But  if  it  was  an  offer  to  sell  perish- 
able fruit;  five  days  might  weU  be  considered  as  an 
unreasonable  time.  In  the  Story  Case,  the  Court  would 
hold  that  the  offer  had  lapsed  at  the  time  it  was  at- 
tempted to  be  accepted. 


d.     By  Death 
STORY  CASE 

Colonel  Watergin,  a  native  of  North  Carolina,  of- 
fered his  slave  ** Jonah"  to  Mr.  George  Therfad  for 
$400,  before  the  Civil  war.  On  the  next  day,  the  Colonel 
was  kiUed  in  a  duel.  Mr.  Therfad,  not  knowing  of  his 
death,  sent  a  letter  to  him  accepting  the  offer,  but  the 
heir  and  executor  of  Colonel  Watergin  refused  to  re- 
linquish "Jonah.**  Mr.  Therfad  sued  him  for  breach 
of  the  contract  to  sell  him  the  slave. 

To  this  suit,  the  heir  and  executor  advanced  the  de- 
fense that  the  offer  made  by  the  Colonel  expired  with 
his  death.    Is  this  a  good  defense? 


CONTRACTS  121 

RULING  COURT  CASE 

Townsend  vs.  Wallace,  Volume  43  Ohio  State  Re- 
ports, Page  537;  Volume  54  American  Reports,  Page 
829. 

A  certain  railroad  company,  represented  by  Town- 
send  in  this  action,  had  proposed  to  build  a  road  over 
a  designated  route  to  the  Ohio  River,  opposite  the  City 
of  Wheeling,  provided  that  persons  along  the  route 
would  subscribe  to  the  capital  stock  of  the  railroad 
company.  Wallace,  knowing  of  this,  and  being  de- 
sirous of  promoting  the  scheme,  caused  a  public  meet- 
ing to  be  held,  and  appointed  a  committee  to  solicit 
subscriptions  to  the  capital  stock  of  the  company.  Wal- 
lace himself  signed  the  list,  which  was  an  offer  on  his 
part  to  take  a  certain  number  of  shares  of  stock  in  the 
company.  Before  this  list  was  delivered  to  the  com- 
pany, Wallace  died ;  and,  after  the  work  was  completed, 
this  action  was  began  against  the  defendant  Wallace, 
as  the  personal  representative  of  Wallace  deceased. 
The  action  was  for  damages  for  the  failure  to  take 
stock  in  the  Company. 

The  defense  of  Wallace,  the  defendant,  consisted  in 
the  plea  that  no  contract  was  made  between  Wallace, 
deceased,  and  the  company,  because  he  died  before  the 
company  knew  of  his  offer,  and  at  his  death,  the  offer 
terminated  and  could  not  thereafter  be  accepted. 

Mr.  Justice  Owen  said  in  part:  ''Here  was  an  un- 
accepted conditional  subscription  by  Wallace  to  the 
capital  stock  of  the  company.  Indeed,  looking  to  its 
substance  and  plain  intent,  rather  than  its  form,  we 
find  it  to  be  no  more  than  an  offer  to  subscribe  to  stock 
upon  certain  named  conditions.  It  was  not  a  subscrip- 
tion to  stock  in  the  ordinary  sense  of  that  term.    The 


122  CONTRACTS 

company  was  not  a  party  to  it,  and  was  under  no  obli- 
gation to  accept  it  at  any  time  during  the  life  of  Wal- 
lace. It  was  at  best  an  unaccepted  proposal.  Before 
its  acceptance,  and  indeed  before  the  party  to  whom 
it  was  made  had  notice  of  it,  the  proposer  died.  It  was 
a  proposal,  capable  of  revocation  at  any  time  before 
acceptance,  and  death  worked  a  complete  revocation. ' ' 
Therefore,  it  was  decided  that  Townsend  could  re- 
cover nothing  in  this  action. 

EULINQ  UlW 

Story  Case  Answer 

It  is  the  general  rule  that  an  offer  is  revoked  by  the 
death  of  the  person  who  makes  it.  An  examination 
into  the  situation  reveals  this  theory:  That  each  mo- 
ment during  the  continuance  of  the  offer,  the  offeror 
is  regarded  as  continually  making  a  new  offer.  If  he 
dies,  of  course,  he  can  make  no  new  offer ;  and  the  offer 
he  has  made  is  past;  thus,  it  follows  that  there  is 
nothing  to  accept,  when  the  offeror  has  died  before  ac- 
ceptance. Thus,  in  the  Story  Case,  the  offer  of  the  Col- 
onel ceased  when  he  died;  therefore,  Therfad  had  no 
claim  against  the  executor  for  the  slave  or  for 
damages. 


e.    By  Conditional  Acceptance 

STOEY  CASE 

Silas  Defor  offered  his  fast  trotting  horse  to  Hohn 
Hostetter  for  $250.  Hostetter  was  a  notorious  horse 
trader  and  tried  to  secure  a  better  bargain.  Defor 
said: 

**I  won't  take  a  cent  less  than  $225." 


CONTRACTS  123 

Then  Hostetter  said: 

*'I'll  give  you  $215. »' 

Defor  refused  to  take  this  price  and  prepared  to 
leave.    Hostetter  then  said : 

"AU  right,  I'U  give  you  $225." 

But  Defor  would  not  then  accept  that  price  and  re- 
fused to  negotiate  vnth  Hostetter  further.  Hostetter 
brought  suit  on  the  ground  that  Defor  broke  his  prom- 
ise to  sell  for  $225. 

Defor  defended  the  suit  on  the  ground  that  the  offer 
of  $225  was  terminated  by  the  counter  offer  of  $215 
which  Hostetter  made.  Do  you  think  that  the  defense 
is  sufficient? 

BUUNG  COnST  CASE 

Hyde  vs.  Wrench,  Volume  3  Beavan's  English  Re- 
ports, Page  334. 

Wrench,  desirous  of  disposing  of  an  estate  by  him 
owned,  offered  to  sell  it  to  Hyde  for  1,200  pounds. 
Hyde  declined  to  accept  the  offer,  claiming  the  price 
asked  for  the  estate  was  too  high.  Thereupon,  Wrench 
stated  by  letter  that  he  would  make  one  more  offer, 
from  which  he  would  not  withdraw ;  that  this  offer  was 
to  sell  the  estate  for  1,000  pounds;  and  he  demanded 
a  return  reply.  When  he  received  this  offer,  Hyde 
sent  back  the  proposition  that  he  would  give  950  for 
the  estate.  Wrench  refused  absolutely  to  accept  950 
pounds.  Then  Hyde  wrote  that  he  would  accept  the 
offer  at  1,000  pounds;  this.  Wrench  refused  to  con- 
sider. In  the  meantime,  he  sold  the  estate  to  another 
person.  Hyde,  thereupon,  brought  this  action  for 
damages. 

Wrench  contended  that  no  contract  ever  resulted; 
that  when  he  made  his  offer  of  1,000  pounds,  and 


124  CONTEACTS 

Hyde  replied  that  he  would  give  950  pounds,  this  was 
a  new  offer,  and  his  original  offer  was  gone. 

The  Master  of  the  Rolls  said  in  part:  "Under  the 
circumstances  stated,  I  think  there  exists  no  valid 
binding  contract  between  the  parties  for  the  purchase 
of  property.  Wrench  offered  to  sell  it  for  1,000 
pounds,  and  if  that  had  been  at  once  unconditionally 
accepted,  there  would  have  been  a  perfect  binding  con- 
tract ;  instead  of  that,  Hyde  makes  an  offer  of  his  own, 
to  purchase  the  property  for  950  pounds,  and  he  there- 
by rejected  the  offer  previously  made  by  Wrench.  I 
think  that  it  was  not  afterwards  competent  for  him  to 
revive  the  proposal  of  Wrench  by  tendering  an  ac- 
ceptance of  it;  and,  that,  therefore,  there  exists  no 
obligation  of  any  sort  between  the  parties." 

Accordingly,  judgment  was  given  for  the  defendant, 
Wrench. 

EULING  LAW 
Story  Case  Answer 

A  conditional  acceptance  operates  as  a  rejection  of 
the  offer.  It  is  well  to  analyze  a  case  and  see  what  the 
reason  for  this  result  is.  Suppose  that  A  says  to  B : 
"I  will  sell  you  my  watch  for  $50."  To  this  B  re- 
plies: **I  will  give  you  $40."  B  has  not  expressly 
rejected  the  offer  made  by  A,  but  by  implication  he 
has.  He  virtually  says :  *'I  reject  your  offer  of  $50, 
and  will  make  you  an  offer  of  $40."  Thus,  a  so- 
called  conditional  offer  is  two  things:  It  is,  in  the 
first  place,  a  rejection  of  the  offer  made;  and  in  the 
second  place,  is  the  making  of  a  new  offer  on  different 
terms.  This  is  what  happened  in  the  Story  Case; 
Defor  made  an  offer  to  sell  for  $225;  Hostetter  ap- 
parently rejected  that  offer,  and  made  a  new  offer  of 


CONTRACTS  125 

$215.  Of  course,  this  new  offer  does  not  impose  any 
obligation  upon  Defor  unless  he  accepts  it.  Thus,  the 
defense  of  Defor  is  good  and  sufficient. 


f.     By  Revocation 
STORY  CASE 

Pat  O'Keefe  decided  to  sell  the  piano  that  he  had 
purchased  for  his  little  daughter,  and  inserted  the  fol- 
lowing offer  of  sale  in  the  daily  paper : 

"I  will  sell  my  Jones  upright  piano  for  $175. 

Pat  O'Keefe.'' 

His  wife  saw  the  advertisement  and,  after  talking 
the  matter  over  with  her,  he  decided  not  to  sell.  He  at 
once  phoned  the  office  of  the  paper  to  withdraw  the 
notice,  and  to  insert  another  one  to  the  effect  that  the 
offer  was  withdra^sm.  This  was  done,  and  for  three 
days,  the  notice  of  withdrawal  was  run  in  the  paper. 

Mr.  -Dugan,  who  did  not  subscribe  for  the  paper, 
chanced  to  see  the  offer  of  sale,  although  he  did  not 
see  the  notice  of  •withdrawal.  On  the  second  day  after 
the  notice  of  ^vithdrawal  had  been  inserted,  he  saw 
Pat  on  the  street  and  said  that  he  accepted  the  offer. 
Pat  informed  him  that  the  offer  had  been  revoked. 
Dugan  replied  that  he  had  not  seen  the  notice  and 
would  hold  Pat  to  his  offer. 

Dugan  immediately  started  suit  against  O'Keefe. 
Was  his  case  a  good  one! 

EUUNG  COURT  CASE 

EsJcridge  vs.  Glover,  Tennessee  Reports, 
Eskridge,  the  plaintiff  in  this  case,  was  making  a 
horseback  journey  to  Tennessee.    His  horse  became 


126  CONTRACTS 

sick  and  he  stopped  at  the  home  of  Glover,  the  de- 
fendant. After  some  negotiations,  Glover  offered  to 
give  a  horse,  which  he  owned,  and  fifty  dollars  in  ad- 
dition, for  Eskridge's  horse,  provided  Eskridge  was 
willing  to  accept,  after  having  ridden  the  horse  ten 
miles.  Eskridge  agreed  to  take  the  horse  and  give 
him  a  trial ;  if  he  liked  him  at  the  end  of  the  ten  miles, 
he  would  keep  him ;  if  he  did  not  like  the  horse  he  was 
to  return  him.  He  had  gone  only  two  or  three  miles 
when  Glover  pursued  and  overtook  him,  and  demanded 
the  return  of  his  horse,  because  the  horse  left  with  him 
was  dying.  Eskridge  returned  the  horse,  but  claimed 
that  Glover  had  broken  his  contract.  Thereafter,  he 
sued  for  damages. 

Glover  contended  that  he  was  not  liable  because  no 
contract  existed  between  them;  he  argued  that  he  re- 
voked the  offer  before  it  was  accepted  by  Eskridge  and, 
therefore,  no  contract  could  result. 

Decision:  An  offer  is  the  mere  expression  on  the 
part  of  the  offeror  to  contract;  unless  this  offer  is 
under  seal,  or  supported  by  a  consideration,  it  may  be 
withdrawn  by  the  offeror  at  any  time  before  it  is  ac- 
cepted. In  this  case,  Glover  made  an  offer,  and  agreed 
that  it  should  continue  open  until  Eskridge  had  ridden 
the  horse  ten  miles.  Before  he  had  ridden  the  distance, 
and  before  he  had  accepted,  Glover  overtook  him  and 
withdrew  his  offer.  Thereafter,  there  was  nothing  for 
Eskridge  to  accept,  and  no  contract  could  be  made  be- 
tween the  parties. 

Therefore,  judgment  was  given  for  Glover,  the  de- 
fendant. 


CONTRACTS  127 

ETJUNG  LAW 
Story  Case  Answer 

The  revocation  of  the  offer  must  be  communicated 
to  the  person  to  whom  it  was  made.  An  offer  made 
directly  to  a  person  can  be  revoked  only  by  notice  to 
that  person  of  its  revocation.  An  offer  made  to  the 
public,  as  in  a  newspaper,  or  by  a  public  notice,  may  be 
revoked  in  the  same  manner.  In  the  Story  Case,  the 
offer  was  sufficiently  revoked  by  the  notice  of  with- 
drawal in  the  paper  in  which  the  offer  had  been  pub- 
lished. Therefore,  Dugan  has  no  case  against  0  'Keef e. 


B.    There  Must  Be  an  Acceptance 

(1)     Acceptance  Changes  the  Offer  Into  a  Contract 

STOBY  CASE 

David  Hxmiphry  offered  his  Jersey  cow  to  Mr. 
Rowan  for  $85  and  stipulated  that  the  offer  was  to  be 
open  for  only  three  days.  On  the  very  next  day,  Mr. 
Rowan,  stated  to  Humphry  that  he  accepted  the  offer 
and  tendered  the  price.  Humphry  refused  to  accept 
the  money  and  said: 

*'The  offer  was  to  remain  open  for  three  days. 

Now  in  that  space  of  time  you  could  buy  or  not 

buy  and  I  had  the  like  privilege.    I  have  decided 

not  to  sell  the  Jersey." 

Mr  Rowan  immediately  brought  suit  on  the  breach 

of  promise,   and  Humphry  defended  on  the  above 

ground.    Is  the  defense  valid. 

RULING  COURT  CASE 

Prescott  vs.  Jones,  Volume  69  New  Hampshire  Re- 
ports, Page  305;  Volume  41  Atlantic  Reporter,  Page 
352. 


128  CONTRACTS 

Jones  was  an  insurance  agent ;  in  the  course  of  his 
business  he  insured  Prescott's  buildings  in  the  Man- 
chester Fire  Insurance  Company  until  February  1, 
1897.  On  January  23,  1897,  Jones  notified  Prescott 
that  he  would  renew  the  policy,  and  insure  his  build- 
ings for  a  further  term  of  one  year,  from  February  1, 
1897,  in  the  sum  of  $500,  unless  notified  to  the  con- 
trary. Prescott  made  no  reply  whatsoever  to  this  of- 
fer. On  the  1st  of  March,  1897,  the  buildings  in  ques- 
tion were  destroyed  by  fire.  Prescott  demanded  pay- 
ment of  his  loss  from  the  agent,  Jones.  Jones  refused 
to  make  good  the  loss;  Prescott,  thereupon,  brought 
this  action. 

Jones  contended  that  no  contract  was  ever  made  be- 
tween them,  because  Prescott  did  not  accept  his  offer. 

Decision :  When  a  person  communicates  his  willing- 
ness to  contract,  in  order  to  make  of  this  willingness  a 
legal  obligation,  the  offeree,  or  the  person  to  whom 
the  offer  is  made,  must  in  some  way  communicate  to 
that  person  his  willingness  and  desire  to  accept  an 
obligation  from  him.  An  acceptance  is  necessary  in 
order  to  create  a  binding  obligation  or  contract  be- 
tween the  offeror  and  offeree.  In  this  case,  Prescott 
did  not  endeavor  in  any  way  to  indicate  his  willingness 
and  desire  to  accept  the  obligation  of  Jones.  It  fol- 
lows, therefore,  that  no  contract  was  ever  made  be- 
tween them. 

Therefore,  judgment  was  given  for  Jones,  the  de- 
fendant. 

EtriilNG  LAW 
Story  Case  Answer 
Acceptance  is  an  expression  on  the  part  of  the  sec- 
ond person  of  his  willingness  to  be  bound  to  the  first 


CONTRACTS  129 

party.  Until  the  second  party  has  done  this,  he  gets 
no  contractual  rights  against  the  other.  As  soon  as  an 
acceptance  is  made,  the  offer  ceases  and  the  contract 
begins.  In  the  Story  Case,  Humphry  made  an  offer ;  he 
expressed  a  willingness  to  sell  his  cow  for  a  certain 
sum;  before  he  had  withdrawn  that  offer,  the  person 
to  whom  it  was  made,  expressed  his  willingness  to  buy 
the  cow  at  that  price ;  thereupon,  the  offer  ceased  and 
from  the  offer  and  acceptance  a  contract  resulted. 
Therefore,  the  defense  of  Mr.  Humphry  is  not  good. 


(2)     When  Offer  Specifies  the  Time,  an  Acceptance  After 

That  Time  Is  of  No  Effect 

STOBY  CASE 

The  Turkish  government  wished  to  buy  some  cannon 
from  the  Hupps.  The  latter  made  the  Turkish  repre- 
sentative an  offer  for  some  new  style  cannon,  but  the 
representative  was  compelled  to  get  permission  from 
his  government  before  he  could  accept  the  offer. 

The  parties  made  the  following  arrangement:  It 
would  require  approximately  twenty-four  hours  for  the 
offer  to  be  telegraphed  to  Turkey  and  for  the  reply 
to  be  telegraphed  back.  Therefore,  the  Hupps  agreed 
to  keep  the  offer  open  until  noon  of  the  following  day 
and  the  Turkish  representative  gave  them  100  marks 
for  the  option. 

Because  of  some  delay  in  the  transmission  of  the 
telegrams,  the  message  of  acceptance  from  Turkey  did 
not  reach  the  Hupps  until  fifteen  minutes  past  noon  of 
the  next  day.  The  Hupps  refused  to  be  bound  by  the 
acceptance,  because  of  the  delay.  The  Turkish  repre- 
rentative  insisted  that  the  delay  was  so  slight  that  it 
could  not  cause  any  injury  and  that,  therefore,  the  ac- 


130  CONTEACTS 

ceptanee  was  binding.     The  Turkish  representative 
brought  suit  and  the  Hupps  defended  on  the  ground 
that  the  offer  terminated  at  noon  of  the  next  day. 
Will  the  Hupps  lose  the  suit? 

RULING  COURT  CASE 

Maclay  vs.  Harvey,  Volume  90  Illinois  Reports,  Page 
525 ;  Volume  32  American  Reports,  Page  35. 

Harvey,  the  defendant  in  this  action,  desired  to  se- 
cure a  milliner  for  the  spring  season.  He  wrote  a 
letter  to  Miss  Maclay,  the  plaintiff  in  this  action,  in 
which  he  offered  to  engage  her  on  certain  terms  for  the 
season.  In  the  letter,  in  which  he  made  the  offer,  he 
requested  a  reply  by  return  mail.  Miss  Maclay  re- 
ceived the  letter  on  the  22nd  of  March;  the  following 
day  she  wrote  a  card  in  which  she  accepted  the  offer ; 
she  handed  it  to  a  boy  to  mail;  he  neglected  to  post 
it  until  the  25th  of  March.  Harvey,  failing  to  hear 
from  her  by  return  mail,  secured  the  services  of  an- 
other young  lady  for  the  season  in  question,  and  re- 
fused to  consider  the  application  of  Miss  Maclay  for 
employment.  Thereupon,  she  brought  this  action, 
claiming  damages  for  the  breach  of  her  alleged 
contract. 

Harvey,  however,  claimed  that  there  was  no  con- 
tract, because  she  had  not  accepted  within  the  time 
limit  which  he  had  proposed. 

Decision :  It  is  the  privilege  of  one  making  an  offer 
to  set  a  limit  upon  the  time  within  which  it  way  be 
accepted.  Unless  the  offeree  complies  with  the  terms 
of  the  offer,  by  accepting  within  that  time  limit,  the 
offer  automatically  expires.  Here  Harvey  expressly 
requested  a  reply  by  return  mail;  although  Miss 
Maclay  believed  she  was  accepting  by  return  mail,  her 


CONTEACTS  131 

own  agent,  the  boy,  was  responsible  for  the  delay  and 
it  was  her  misfortune  that  the  letter  was  not  posted. 
Since  the  acceptance  was  too  late,  no  contract  resulted. 
Therefore,  judgment  was  given  for  the  defendant, 
Harvey. 

EUUNa  LAW 
Story  Case  Answer 

We  have  seen  that  an  offer  may  be  made  for  a  cer- 
tain time  only;  that  it  will  lapse  after  a  reasonable 
time ;  or  that  it  may  be  revoked  at  any  time  before  ac- 
ceptance, unless  the  offer  is  made  under  seal  or  sup- 
ported by  a  consideration;  or  it  may  be  revoked  by 
death  of  the  person  making  it ;  or  a  conditional  accept- 
ance operates  as  a  rejection  of  the  offer.  If  the  offer 
terminates  for  any  of  the  foregoing  reasons,  the  situa- 
tion of  the  parties  is  exactly  as  if  no  offer  had  ever 
been  made.  Consequently,  an  acceptance  imder  any  of 
the  foregoing  circumstances  imposes  no  obligation 
upon  the  person  who  made  the  offer ;  and  confers  no 
right  upon  the  person  who  made  the  offer ;  and  confers 
no  right  upon  the  person  who  seeks  to  accept  the  offer 
now  terminated.  In  the  Story  Case,  the  Hupps  ex- 
pressly stated  the  time  within  which  the  offer  was  to 
be  accepted ;  since  it  was  not  accepted  within  the  time 
stated,  the  offer  terminated ;  and  the  attempt  to  accept 
thereafter,  by  the  Turkish  representative  was  of  no 
effect  and  they  can  recover  nothing  from  the  Hupps. 


(3)     When  No  Time  for  Acceptance  Is  Made,  a 

Reasonable  Time  to  Accept  Is  Implied 

STOET  CASE 

The  Good  Strawberry  Company  made  the  following 
offer  to  Friend  Brothers,  commission  merchants: 


132  CONTEACTS 

''February  1,  1915. 
We  will  sell  you  a  carload  of  ripe  Florida  straw- 
berries for  the  current  market  price,  to  be  de- 
livered in  crates  at  our  expense. 

(Signed)  Good  Strawbekry  Co." 

This  letter  reached  Friend  Bros,  on  the  evening  of 
February  1,  and  they  sent  their  acceptance  on  Febru- 
ary 4.  The  strawberry  company  had  sold  the  berries 
on  February  2. 

Friend  Bros,  sued  the  strawberry  company  for 
breach  of  their  contract  to  sell  and  deliver  the  carload 
of  berries  as  per  the  agreement.  The  strawberry  com- 
pany defends  on  the  ground  that,  since  strawberries 
are  perishable,  the  offer  terminated  on  the  2nd.  They 
claim  that  an  offer  will  terminate  in  a  reasonable  time 
when  no  definite  termination  is  specified  and  that  a 
reasonable  time  for  the  termination  of  an  offer  of  sale 
of  ripe  strawberries  is  immediately. 

Which  party  will  win  the  suit? 

EULING  COURT  CASE 

Cohn  vs.  Kemper,  Volume  47  Arhansaw  Reports, 
Page  519 ;  Volume  58  American  Reports,  Page  775. 

Mr.  Kemper,  on  January  30,  1885,  wrote  the  follow- 
ing letter  to  Mr.  Cohn : 

"Hot  Springs. 
M.  M.  Cohn,  Little  Rock,  Ark.: 

Dear  Sir :  Yours  of  the  28th  received  and  con- 
tents noted.  In  reply,  will  say,  in  regard  to  the 
lot  by  me  owned,  I  will  sell  to  you  for  $10,000; 
$5,000  in  cash,  and  for  $5,000  give  your  note  with 
ten  per  cent  interest.    If  this  is  satisfactory,  send 


CONTRACTS  133 

the  deed  and  I  will  return  it  properly  acknowl- 
edged. 

J.  Kemper.'* 

On  Febmary  7,  1885,  Cohn  replied,  accepting  the 
offer.  In  the  meantime,  Kemper  altered  his  plans  and 
refused  to  sell  the  lot,  although  he  had  not  withdrawn 
his  offer.  Thereupon,  Cohn  brought  this  suit  for 
damages. 

Kemper  contended  that  his  offer  was  not  accepted 
within  a  reasonable  time,  and  therefore,  the  acceptance 
was  too  late,  and  no  contract  resulted. 

Decision :  A  contract  by  letter  is  complete  the  mo- 
ment the  letter  of  acceptance  is  mailed,  provided  it  is 
done  "v^ith  reasonable  promptness  and  before  the  offer 
is  withdrawn.  "V\Tiat  constitutes  a  reasonable  time  is 
a  question  of  fact,  depending  upon  the  circumstances 
of  each  case.  If  the  offer  was  to  sell  articles  which 
fluctuated  in  value  from  day  to  day,  as  stock,  or  if  the 
offer-  was  to  sell  perishable  goods,  like  fresh  fruit, 
three  days  might  be  an  unreasonable  length  of  time  to 
delay  an  acceptance ;  but  a  longer  time  may  be  permit- 
ted, not  unreasonably,  for  the  acceptance  of  an  offer 
to  sell  land,  where  no  special  circumstances  exist.  In 
this  case,  the  court  was  of  the  opinion  that  the  accept- 
ance was  wdthin  a  reasonable  time.  Such  being  the 
case,  a  contract  resulted,  and  Cohn  is  entitled  to  dam- 
ages for  the  refusal  of  Kemper  to  perform  it. 

Judgment,  therefore,  was  given  for  Cohn  in  this 
action. 

BUUNG  LAW 
Story  Case  Answer 
It  has  been  stated  in  a  foregoing  section  that  an  offer 
terminates  unless  it  is  accepted  within  a  reasonable 


134  CONTRACTS 

time  after  it  is  made.  The  converse  of  that  proposi- 
tion is  equally  true ;  that  an  acceptance  must  be  made 
within  a  reasonable  time  in  order  to  create  a  binding 
contract  between  the  parties.  As  was  said  there,  what 
constitutes  a  reasonable  time  will  depend  upon  the 
facts  and  circumstances  of  each  case;  no  definite  rule 
can  be  formulated.  In  the  Court  Case  of  CoJin  vs. 
Kemper,  the  Court  held  that  an  acceptance  made  over 
a  month  after  the  offer  was  communicated  was  made 
within  a  reasonable  time.  But  the  subject  of  the  con- 
tract was  land,  the  value  of  which  does  not  change 
rapidly.  If  the  offer  had  been  to  sell  stock  which  fluc- 
tuated in  value  from  day  to  day,  the  Court  xmdoubtedly 
would  have  held  that  a  month  was  an  unreasonable  de- 
lay made  by  the  offeree  before  accepting.  In  the  Story 
Case,  the  Court  will  decide  that  the  acceptance  was  too 
late;  the  subject  matter  was  fresh  fruit  which  would 
have  perished  before  the  acceptance  was  made.  There- 
fore, judgment  should  be  given  for  the  Good  Straw- 
berry Company. 


(4)     Acceptance  Must  Be  an  Overt  Act 

a.     Acceptance  Must  Be  Communicated 

STORT  CASE 

Mr.  Radnitz  circulated  handbills  with  the  following 
notice : 

**I  offer  my  threshing  machine  for  sale  for  the 
price  of  $500. 

(Signed)  Joseph  Radnitz. *' 

The  next  day,  Gerhart  drove  to  Radnitz'  residence 
for  the  purpose  of  accepting  the  offer,  but  Radnitz  was 


CONTRACTS  135 

not  at  home.  It  also  chanced  that  the  machine  was 
Bold  on  the  same  day. 

Gerhart,  however,  protested  to  Radnitz  that  he  had 
accepted  the  offer  of  sale  before  the  machine  was  sold 
and  that  he  would  sue  him  for  breach  of  contract. 

Radnitz  defends  on  the  ground  that  he  had  no  notice 
of  the  uncommunicated  acceptance  and  that  he  was 
not  bound  by  it.  Do  you  think  that  the  defense  is  a 
good  one? 

EULING  COUET  CASE 

White  vs.  Corlies,  Volume  46  New  York  Reports, 
Page  467. 

Samuel  P.  White  was  a  builder  with  his  place  of 
business  in  40th  Street,  in  the  City  of  New  York.  Cor- 
lies and  Tift,  the  defendants  in  this  action,  were  mer- 
chants with  an  office  at  32  Day  Street  in  the  same  city. 
In  September,  1865,  Corlies  furnished  White  with 
specifications  for  fitting  up  a  suite  of  offices  at  57 
Broadway,  and  requested  him  to  make  an  estimate  of 
the  cost  of  the  work.  On  September  28,  White  left  his 
estimate  with  Corlies  to  be  considered.  After  a  day 
or  two  spent  in  considering  the  estimate,  the  following 
note  was  sent  to  White: 

"Upon  an  agreement  to  finish  the  fitting  up  of 
offices,  57  Broadway  in  two  weeks  from  date,  you 
may  begin  at  once. 

J.  W.  Corlies.  »' 

No  reply  was  ever  made  by  White  to  this  note ;  but 
when  he  received  it,  he  began  buying  lumber  to  be  used 
in  the  work.  The  day  after  the  note  was  delivered  to 
White,  Corlies  notified  him  that  he  had  changed  his 
decision  about  the  work  and  that  he  need  not  consider 


136  CONTRACTS 

further  procedure.  White  claimed  that  he  had  a  con- 
tract, and  that  this  notice  was  a  breach;  and,  there- 
fore, brought  this  action  for  damages. 

Corlies  contended,  however,  that  the  contract  was 
not  complete,  because  he  had  received  no  notice  of  his 
acceptance ;  and  that,  therefore,  he  was  not  liable  for 
damages. 

Decision:  Before  an  offer  can  be  turned  into  a 
binding  contract,  there  must  be  an  acceptance;  and 
this  acceptance  must  be  communicated  by  some  word 
or  appropriate  act,  showing  an  acceptance.  The  pur- 
chase of  lumber  by  White  was  not  an  appropriate  act 
which  sufficiently  indicated  his  intention  of  accepting, 
because  the  lumber  might  have  been  purchased  for  any 
other  work  which  he  might  have  been  doing.  There- 
fore, there  was  no  contract,  and  Corlies  is  not  liable  in 
this  action. 

Mr.  Justice  Folger  said  in  part:  "Where  an  offer 
is  made  by  one  party  to  another  when  they  are  not  to- 
gether, the  acceptance  of  it  by  that  other  must  be  mani- 
fested by  some  appropriate  act.  It  does  not  need  that 
the  acceptance  shall  come  to  the  knowledge  of  the  one 
making  the  offer  before  he  shall  be  bound.  But  though 
the  manifestation  need  not  be  brought  to  his  knowledge 
before  he  becomes  bound,  if  that  manifestation  is  not 
put  in  a  proper  way  to  be  in  the  usual  course  of  events, 
in  some  reasonable  time,  communicated  to  him,  he  is 
not  bound.  Thus,  a  letter  received  by  mail,  containing 
a  proposal,  may  be  answered  by  letter,  containing  the 
acceptance.  And  in  general,  as  soon  as  the  answering 
letter  is  mailed,  the  contract  is  concluded.  Though  one 
party  does  not  know  of  the  acceptance,  the  manifesta- 
tion thereof  is  put  in  the  proper  way  of  reaching  him. 


CONTRACTS  137 

In  the  case  at  hand,  White  determined  to  accept.  But 
a  mental  determination,  not  indicated  by  speech  or  put 
in  course  of  indication  by  act  to  the  other  party,  is  not 
an  acceptance  which  will  bind  the  other." 

Therefore,  judgment  was  given  for  Corlies,  the  de- 
fendant in  this  action. 

RULING  LAW 

Story  Case  Answer 
An  acceptance  must  be  actually  communicated  to  the 
person  making  the  offer ;  or  the  person  accepting  must 
perform  some  appropriate  act,  manifesting  his  inten- 
tion and  willingness  to  enter  into  the  contractual  re- 
lation. The  secret  intention  of  Mr.  Gerhart  in  the  Story 
Case  is  insufficient ;  it  would  be  very  unfair  and  incon- 
venient to  permit  a  person  to  accept  by  mere  intention 
without  some  manifestation  of  the  intention.  A  much 
more  difficult  question  is  presented  by  the  case  of 
White  vs.  Corlies.  There,  White  did  not  actually  com- 
municate his  acceptance  to  Corlies,  but  he  contended 
that  the  purchase  of  his  material  was  an  appropriate 
act  which  indicated  his  willingness  to  accept.  But  the 
Court  was  of  opinion  that  this  was  not  an  appropriate 
act,  because  buying  of  lumber  was  something  which  he 
did  constantly  and  was  no  special  indication  that  he 
had  determined  to  accept  the  proposition  of  Mr. 
Corlies. 


b.     If  Acceptance  Is  Made  in  Manner  Required,  It  Is 

Not  Material  If  It  Is  Never  Received 

STOEY  CASE 

In  the  Kentucky  mountains  there  was  formerly  no 
United  States  mail,  so  James  Tullifer,  who  had  some 
corn  for  sale,  wrote  to  the  miller,  Hobes : 


138  CONTRACTS 

December  16,  1845. 
Dear  Sir: 

I  have  for  sale  50  bushels  of  corn  which  I  will 
sell  to  yon  at  the  same  rate  I  made  yon  last  year. 
If  yon  want  this  corn,  leave  a  note  for  me  under 
the  stone  at  the  Cross  Roads. 

(Signed)  James  Tullitee.^' 

Hobes  left  a  note  under  the  stone  for  TuUifer  but 
some  children  destroyed  it.  Tullifer  did  not  find  a 
note  for  him  and  sold  the  corn  to  another  miller. 

Hobes,  thinking  that  Tullifer  would  deliver  the  corn, 
incurred  a  great  expense  in  preparing  to  grind  it.  He 
now  sued  Tullifer  for  the  damage  it  caused  him  to  be 
deprived  of  the  corn  and  for  breach  of  the  contract  to 
sell.  Tullifer  defended  on  the  ground  that  he  did  not 
receive  the  acceptance  and,  therefore,  was  not  bound. 

Which  party  won? 

EULING  COUET  CASE 

Phehe  Howard  vs.  August  Daly,  Volume  61  New 
York  Reports,  Page  362 ;  Volume  19  American  Reports, 
Page  285. 

August  Daly  was  the  manager  and  proprietor  of  the 
Fifth  Avenue  Theater  in  the  City  of  New  York.  Phebe 
Howard  applied  to  him  for  employment  as  an  actress. 
The  evidence  showed  that  an  offer  in  writing  was  made 
by  Daly  to  Phebe  Howard  for  the  engagement  of  her 
services  for  one  year  at  ten  dollars  per  week.  He  sent 
with  this  proposal  a  duplicate  copy  which  was  to  be 
signed  and  returned  by  her  as  her  acceptance.  She 
signed  the  duplicate  and  placed  it  in  the  letter  box  of 
Daly  at  his  theater.    He  admitted  this  box  was  used  as 


CONTRACTS  139 

a  place  for  deposit  of  the  duplicates  of  contracts  made 
between  him  and  actors  and  actresses.  When  the  sea- 
son opened,  Phebe  reported  for  duty  but  August  Daly 
refused  to  employ  her  or  to  recognize  any  contractual 
relation  between  them.    She  sued  him  for  damages. 

His  defense  consisted  in  the  fact  that  he  never  re- 
ceived the  duplicate  from  her  by  which  she  accepted 
the  employment,  and,  therefore,  no  contract  ever 
resulted. 

Decision:  Where  acceptance  of  an  offer  is  author- 
ized in  a  certain  manner,  or  where  such  offer  has  been 
customarily  accepted  in  that  manner,  compliance  with 
the  authority  or  custom  is  all  that  is  necessary  to  con- 
stitute a  binding  contract.  In  this  case,  it  was  shown 
to  be  customary  for  acceptances  of  offers  to  be  put  in 
Daly's  letter  box.  When  Phebe  satisfied  this  demand, 
a  contractual  relation  was  established  between  herself 
and  Daly,  and  it  is  his  misfortune  if  he  never  received 
the  acceptance. 

It  was  said  in  the  opinion  by  the  Court :  **It  is  true 
that  he  (Daly)  testified,  that  he  never  received  the 
papers  which  Phebe  asserts  that  she  placed  in  his  box. 
This,  however,  is  immaterial.  The  minds  of  the  parties 
met  when  she  complied  with  the  usual,  or  even  the  oc- 
casional practice,  and  left  the  acceptance  in  a  place  of 
deposit,  recognized  as  such  by  Daly.'' 

Judgment  was  given  for  Phebe  Howard  for  damages. 

EUUNG  LAW 
Story  Case  Answer 

An  acceptance  made  in  the  manner  authorized  by 
the  offeror  is  good,  even  though  he  may  never  actually 
know  of  the  acceptance.  In  the  Story  Case,  Tullifer 
authorized  an  acceptance  in  a  rather  unusual  manner, 


140  CONTRACTS 

and  he  mnst  assume  the  consequences  of  any  accident 
which  arises  in  reference  to  the  acceptance.  When 
Hobes  placed  the  note  of  acceptance  at  the  place  speci- 
fied, the  contract  was  complete;  therefore,  he  is  en- 
titled to  recover  damages  from  TuUifer  caused  by  the 
failure  of  the  latter  to  deliver  the  corn.  The  same 
problem  was  considered  in  the  Court  Case  of  Howard 
vs.  Daly.  The  court  there  held  that  an  acceptance 
made  in  the  authorized  or  customary  way  was  sufficient 
even  though  Mr.  Daly  never  in  fact  received  the  ac- 
ceptance. 


c.    Acceptance  by  Post  or  Telegraph  Complete  When 

Posted  or  Telegraphed 

STOEY  CASE 

Harry  Mills  wrote  to  Frank  Jones  and  offered  some 
posts  for  sale  at  the  market  price.  As  soon  as  Jones 
received  the  offer,  he  wrote  a  letter  of  acceptance.  This 
letter  was  lost  in  transmission  and  Mills,  thinking  that 
Jones  did  not  want  the  posts,  sold  them  elsewhere. 
After  waiting  for  three  weeks  for  the  shipment  of 
posts,  Jones  learned  of  the  sale  and  immediately  sued 
Mills  for  breach  of  contract.  Mills  defended  on  the 
ground  that  he  never  received  the  acceptance  and  that 
he  was,  therefore,  not  bound.  Should  Jones  or  Mills 
win  the  suit? 

RULING  COURT  CASE 

Trevor  vs.  Wood,  Volume  3  New  York  Reports, 
Page  307;  Volume  93  American  Decisions,  Page  511. 

On  January  30,  Trevor  of  New  York  telegraphed 
to  John  Wood  of  New  Orleans,  asking  his  price  for  one 
hundred  thousand  Mexican  dollars.  The  following  day, 


CONTRACTS  141 

January  31,  Wood  replied  by  telegram,  offering  to  de- 
liver fifty  thousand  Mexican  dollars  at  seven  and  one- 
quarter.  On  the  same  day,  Trevor  sent  the  following 
telegram: 

**To  John  Wood: 

Your  offer  of  fifty  thousand  Mexican  dollars 
accepted. 

Trevor.*' 

This  telegram  did  not  reach  Wood  until  February 
the  4th ;  in  the  meantime,  on  February  3,  Wood  sent  the 
following  message  by  telegraph: 

**No  answer  to  our  dispatch.    The  dollars  are 
sold. 

John  Wood." 

When  Trevor  learned  that  Wood  had  sold  the  dollars 
and  refused  to  get  any  more,  he  brought  suit  for  dam- 
ages for  his  failure  to  comply  with  the  terms  of  their 
contract. 

Wood  contended,  that  he  had  revoked  his  offer  be- 
fore he  had  received  an  acceptance,  and  that,  therefore, 
no  contract  was  ever  made  between  them. 

Decision :  It  is  the  general  rule  that  when  an  offer 
is  made  by  letter,  it  may  be  accepted  in  the  same  man- 
ner ;  and  the  posting  of  the  letter  of  acceptance  is  re- 
garded as  an  inunediate  acceptance;  and  it  is  not 
material  that  it  never  reaches  the  other  party.  The 
same  is  true  in  regard  to  an  offer  and  acceptance  by 
telegraph.  So  here  Trevor  sent  his  telegram  before 
he  had  any  notice  of  a  revocation.  As  soon  as  he  did 
so  the  contract  was  complete,  and  no  subsequent  act  by 


142  CONTRACTS 

the  other  party  could  deprive  him  of  his  right  there- 
under. 

Therefore,  judgment  was  given  for  Trevor  in  this 
action. 

EULING  LAW 
Story  Case  Answer 

These  instances  of  acceptance  by  letter  or  telegram 
are  also  illustrations  of  an  acceptance  by  an  appropri- 
ate act.  When  the  person  writes  a  letter,  making  an 
offer,  he  impliedly  authorizes  the  person  to  whom  the 
offer  is  made  to  accept  in  the  same  manner.  If,  there- 
fore, the  offeree  accepts  by  letter,  the  contract  is  com- 
plete the  moment  that  he  posts  his  letter,  and  the  cre- 
ation of  the  contract  does  not  depend  upon  the  actual 
receipt  of  the  letter  by  the  person  who  made  the  offer. 
It  is  evident  that  the  offeror  cannot  revoke  the  offer 
after  the  letter  of  acceptance  is  posted,  even  though 
he  has  not  yet  received  it.  The  attempted  revocation 
in  the  Court  Case  of  Trevor  vs.  Wood,  was  held  inef- 
fective. In  the  Story  Case,  there  was  a  contract,  not- 
withstanding the  fact  that  the  letter  of  acceptance 
never  reached  Mills.  Therefore,  judgment  should  be 
given  for  Jones. 


d.     An  Offer  May  Require  Actual  Receipt  of  Acceptance 

STOEY  CASE 

Lester  Bonham  wrote  the  following  letter  to  the 
Farnam  Buggy  Company: 

**Feb.  18,  1910. 
Gentlemen :    I  have  for  sale  a  new  carriage  of 
my  own  make  which  I  will  sell  to  you  at  the  same 
price  as  the  last  one.    If  I  do  not  receive  your  let- 


CONTEACTS  143 

ter  of  acceptance  by  the  30th  I  shall  sell  it  else- 
where. 

(Signed)  Lester  Bonham." 

On  the  20th,  the  Famam  Buggy  Co.  mailed  an  ac- 
ceptance of  the  offer,  which  should  have  reached  Bon- 
ham  by  the  22nd.  But  there  was  a  wreck  on  the  rail- 
road and  the  letter  of  acceptance  was  lost. 

On  the  1st  of  March,  Bonham  sold  the  buggy  to  an- 
other company. 

The  Farnam  Buggy  Co.  sued  Bonham  for  his  failure 
to  sell  the  buggy  to  them  and  claim  that  he  (Bonham) 
made  the  United  States  mails  his  agent  to  deliver  the 
letter  to  him  and  that  therefore  he  is  bound. 

Should  the  buggy  company  have  won! 

EXTLING  COUET  CASE 

Helen  Lewis  vs.  Matthew  Browning,  Volume  130 
Massachusetts  Reports,  Page  173. 

Matthew  Browning,  previous  to  the  year  1878,  had 
leased  certain  premises  from  Helen  Lewis,  who,  with 
her  husband,  was  living  in  California.  Dr.  Lewis,  who 
acted  as  agent  for  his  wife,  Helen,  wrote  a  letter  to 
Browning  in  which  he  asked  Browning  to  make  him 
an  offer  for  a  new  lease  of  the  premises  in  question. 
Browning  answered,  making  a  new  offer  by  a  letter 
dated  July  8, 1878.  In  the  reply  received  by  Browning 
on  July  8,  Dr.  Lewis  accepted  Browning's  offer  with 
certain  modifications.  The  letter  concluded  with  the 
following  statement:  "If  you  agree  to  this  plan,  and 
will  telegraph  me  on  receipt  of  this,  I  will  forward 
power  of  attorney  to  have  the  lease  executed.  Tele- 
graph me  'yes'  or  *no'.  If  I  do  not  hear  from  you  by 


144  CONTEACTS 

the  18th  or  20th,  I  shall  conclude  'no\  On  July  17th, 
BrowTiing  replied : '  yes '.  The  message,  however,  never 
reached  Dr.  Lewis.  This  suit  was  thereafter  brought 
on  the  old  lease. 

Browning  contended  that  he  was  no  longer  bound 
by  the  old  lease ;  that  the  dispatch  of  his  telegram  was 
an  acceptance  of  the  offer  of  Dr.  Lewis,  even  though 
it  never  reached  Dr.  Lewis. 

Decision :  The  general  rule  is  that  an  offer  made  by 
a  letter  or  telegram  may  be  accepted  in  the  same  man- 
ner. In  either  case,  the  posting  of  the  letter  or  the  dis- 
patch of  the  telegram  is  regarded  as  the  act  of  accept- 
ance, and  it  is  not  material  that  the  acceptance  is  lost 
in  transmission.  However,  it  is  always  the  privilege 
of  the  one  making  the  offer,  to  require  an  actual  receipt 
of  the  acceptance  before  the  contract  is  complete.  If 
he  does  this,  then  it  is  the  misfortune  of  the  acceptor 
that  his  message  of  acceptance  is  lost.  Thus,  in  this 
case,  no  contract  for  a  new  lease  was  ever  made,  be- 
cause an  actual  receipt  of  the  acceptance  was  specified, 
and  the  requirement  was  never  met  by  Browning. 

Mr.  Chief  Justice  Gray  said :  *  *  A  person  making  an 
offer  may  always,  if  he  chooses,  make  the  formation  of 
the  contract,  which  he  proposes,  dependent  upon  the 
actual  communication  to  himself  of  the  acceptance. ' ' 

The  court  held  that  the  suit  was  properly  brought 
upon  the  old  lease,  and  that  judgment  must  be  given 
for  Helen  Lewis. 

RULING  LAW 
Story  Case  Answer 

When  the  law  discussed  in  the  previous  section  is 
first  considered,  it  seems  harsh  and  unfair  to  the  per- 
son making  the  offer.    But  when  taken  in  connection 


CONTRACTS  145 

with  the  law  in  this  section  the  injustice  is  more  ap- 
parent than  real,  because  it  is  always  ■v^ithin  the  power 
of  the  person  making  the  offer  to  require  actual  re- 
ceipt of  the  acceptance.  It  has  been  observed  hereto- 
fore, that  the  person  making  the  offer,  may  make  it 
on  such  terms  as  please  him;  consequently,  he  may 
stipulate  that  there  will  be  no  contract  unless  the  ac- 
ceptance is  actually  received.  If  he  does  this,  the  con- 
tract is  not  complete  until  he  in  fact  receives  the  letter 
or  telegram,  of  acceptance.  Furthermore,  if  the  letter 
or  telegram  is  lost,  then  no  contract  results.  Thus,  in 
the  Story  Case,  Bonham  made  such  a  stipulation.  The 
letter  was  lost  through  no  fault  of  either  party.  Never- 
theless, no  contract  resulted ;  and  on  the  30th,  Bonham 
was  at  liberty  to  dispose  of  the  buggy  as  he  pleased. 
Judgment,  therefore,  should  be  given  for  Bonham. 


(5)     Silence  Alone  Is  Not  an  Acceptance 
STOEY  CASE 

The  Ferry  Monthly  Magazine  sent  the  following  of- 
fer to  Lopert : 

"July  18,  1913. 
My  Dear  Sir :    Tour  subscription  to  our  maga- 
zine has  expired  and,  unless  we  hear  to  the  con- 
trary from  you,  we  shall  renew  it  at  last  year's 
rate. 

Yours  truly, 

(Signed)  Ferry  Mag.  Co.'' 

Lopert  did  not  send  an  answer  to  this  communica- 
tion, but  he  did  not  want  the  magazine  and  refused  to 
receive  it  from  the  postman. 


146  CONTRACTS 

At  the  end  of  the  year  the  magazine  company  sued 
him  for  the  subscription  price,  claiming  that  his  re- 
fusal to  answer  their  offer  was  an  acceptance.  Lopert 
claims  that  the  company  could  not  impose  upon  him 
the  duty  to  refuse  an  offer  and  that  there  was  no  ac- 
ceptance. 

Which  party  won? 

KULING  COUET  CASE 

Paul  FeltJiouse  vs.  John  FeWhouse,  Volume  11  Com- 
mon Bench  Reports,  New  Series,  Pags  868. 

Paul  Felthouse  was  a  builder  residing  in  London. 
John  Felthouse,  his  nephew,  determined  to  sell  out 
all  his  farming  stock.  In  a  conversation  between  John 
and  Paul  in  regard  to  the  sale  of  a  certain  horse,  John 
offered  him  the  horse  for  30  guineas.  Paul  replied 
that  he  would  give  30  pounds.  John  mistakenly  thought 
he  accepted  his  offer,  and  replied  that  the  contract  was 
made.  He  was  later  informed  of  the  mistake  which 
had  been  made,  and  wrote  to  Paul  that  he  had  not  in- 
tended to  sell  the  horse  for  less  than  30  guineas,  and 
that  he  would  not  sell  her  for  less.  To  this  letter  his 
uncle  wrote  the  following  in  reply: 

**Dear  Nephew: 

Your  price,  I  admit,  was  30  guineas.  I  offered 
30  pounds,  never  more,  and  you  said  the  horse  was 
mine.  However,  as  there  may  be  a  mistake  about 
it,  I  will  split  the  difference,  30  pounds  15  shillings. 
If  I  hear  no  more  about  it,  I  consider  the  horse 
mine  at  30  pounds  15  shillings. 

Paul  Felthouse.'* 

John  Felthouse  did  not  make  any  reply  to  this  let- 
ter; an  express  acceptance  was  not  made  to  this  new 


CONTKACTS  147 

offer.  Bindley,  the  auctioneer,  was  told  by  John  not 
to  sell  this  particular  horse.  However,  when  the  sale 
was  in  progress,  Bindley  forgot  this  instruction  and 
sold  the  horse.  Suit  was  brought  against  John  by 
Paul  Felthouse  for  having  sold  his  horse. 

John  Felthouse  contended  that  he  was  not  liable  be- 
cause no  contract  was  ever  made  between  them;  he 
contended  that  one  person  cannot  force  another  to 
speak  or  make  his  silence  an  acceptance  of  a  contract. 

Decision:  The  general  rule  is,  that,  silence  on  the 
part  of  an  offeree  is  not  assent  to  a  contract.  An  of- 
feror cannot  impose  the  duty  upon  the  offeree  to  refuse 
a  contract  in  order  to  prevent  its  becoming  binding 
upon  him.  Thus,  in  this  case,  no  contract  was  ever 
made  between  Jolin  and  Paul  for  the  sale  and  purchase 
of  this  horse.  Therefore  the  sale  of  this  horse  made 
by  John  was  no  wrong  as  against  Paul;  therefore, 
John  is  not  liable  to  Paul. 

Therefore,  judgment  was  given  for  Jolm  Felthouse, 
the  defendant. 

EUIilNO  LAW 
Story  Case  Answer 

As  a  general  rule,  silence  alone  on  the  part  of  a 
person  to  whom  an  offer  is  made  is  not  an  acceptance 
of  the  offer,  even  though  the  person  making 
the  offer  may  state  that  silence  shall  constitute 
an  acceptance.  The  offeror  has  no  right  to  impose 
upon  the  offeree  any  such  duty;  and  the  law  will  not 
permit  it.  The  law  says  that  a  person  cannot  be  put 
under  a  duty  to  speak,  to  prevent  his  being  bound  to  a 
contract  against  his  will.  In  the  Story  Case,  Lopert 
was  under  no  duty  to  write  to  the  magazine  company 
that  he  did  not  accept  its  offer.    Consequently,  there 


148  CONTRACTS 

was  no  contract  between  them.  In  snch  a  case,  how- 
ever, Lopert  should  not  receive  the  magazines  from  the 
postman  or  the  postoffice.  He  should  direct  the  postal 
authorities  to  return  the  magazines  to  the  company. 


(6)     Acceptance  Must  Be  by  the  Person  to  Whom  the 

Offer  Is  Made 

STORY  CASE 

A  crowd  of  farmers  was   congregated  around  a 

country  store  and  Farmer  Hikey  said  to  John  Smalley : 

**If  you  need  a  binder,  I  will  sell  one  to  you  for  $40.'* 

Wilson  Hight  heard  the  offer  and,  when  he  saw 

Farmer  Hikey  a  short  time  later  he  said : 

''I  accept  your  offer  to  sell  your  binder  for  $40." 
Hikey  refused  to  sell  to  Hight,  because  he  disap- 
proved of  the  slovenly  manner  in  which  Hight  kept 
his  fences.  He  admitted  that  Hight 's  credit  was  su- 
perior to  that  of  Smalley  but  he  persistently  refused 
to  negotiate  with  him. 

Hight  sued  Hil^ey  for  refusing  to  ssU  the  binder  to 
him  and  Hikey  defended,  on  the  ground  that  the  offer 
was  not  made  to  Hight.    Is  this  defense  valid? 

EtTLING  COUET  CASE 

Boston  Ice  Company  vs.  Potter,  Volume  123  Massa- 
chusetts Reports,  Page  28;  Volume  25  American  Re- 
ports, Page  9. 

During,  and  previous  to,  the  year  of  1873,  the  Bos- 
ton Ice  Company  furnished  Patten  with  ice,  daily.  Pot- 
ter became  dissatisfied  with  the  ice  and  service  of  the 
company,  and  refused  to  deal  with  it  longer.  He 
made  a  contract  with  the  Citizen's  Ice  Company.    Be- 


CONTRACTS  149 

fore  April,  1874,  the  latter  company  sold  its  business 
to  the  Boston  Ice  Company  with  the  right  to  supply 
ice  to  its  customers.  No  notice  of  this  change  was 
ever  made  or  communicated  to  Potter.  During  the 
whole  of  that  year,  ice  was  supplied  to  Potter  daily  and 
was  used  by  his  servants.  When  he  discovered  the 
fact  that  it  was  being  furnished  by  the  Boston  Ice 
Company  he  notified  it  to  furnish  no  more,  and  re- 
fused to  pay  anj^thing  for  the  ice  which  had  been  fur- 
nished during  the  preceding  year. 

The  defense  of  Potter  was  that  he  never  made  a  con- 
tract with  the  Boston  Ice  Company ;  he  had  offered  to 
pay  so  much  for  ice  daily,  but  he  made  that  offer 
solely  to  the  Citizen's  Ice  Company,  and  not  to  the 
Boston  Ice  Company. 

Decision :  When  a  person  makes  an  offer  to  a  par- 
ticular person  or  corporation  for  services  or  property, 
that  person,  and  that  person  alone  may  accept  the 
offer.  ,In  this  case,  Potter  had  offered  to  pay  one  com- 
pany so  much  daily  for  ice ;  another  company,  without 
his  knowledge  and  consent,  accepts  his  offer  and  fur- 
nishes the  ice.  But  tliis  acceptance  does  not  make  a 
contract  between  them.  Therefore,  Potter  was  under 
no  contractual  obligation  to  pay  the  Boston  Ice  Com- 
pany for  the  ice  in  question. 

Mr.  Justice  Endicott,  who  delivered  the  opinion  of 
the  Court,  said:  '*A  party  has  the  right  to  select  and 
determine  with  whom  he  will  contract,  and  cannot 
have  another  person  thrust  upon  him  without  his  con- 
sent. It  may  be  of  importance  to  him  who  performs 
the  contract,  as  when  he  contracts  with  another  to 
paint  a  picture,  or  write  a  book,  or  furnish  articles  of 
a  particular  kind,  or  when  he  relies  upon  the  character 


150  CONTEACTS 

or  qualities  of  an  individual,  or  has,  as  in  this  case, 
reasons  why  he  does  not  wish  to  deal  with  a  particular 
party.  In  all  these  cases,  as  he  may  contract  with 
whom  he  pleases,  the  sufficiency  of  his  reasons  for  so 
doing,  cannot  be  inquired  into. ' ' 

Therefore,  it  was  decided  that  the  Boston  Ice  Com- 
pany could  not  recover  from  Potter. 

RULING  LAW 
Story  Case  Answer 

An  offer  made  to  one  person  does  not  constitute  an 
offer  to  any  other  person.  Obviously,  therefore,  only 
the  person  to  whom  the  invitation  has  been  extended 
can,  in  reliance  on  the  offer,  complete  a  binding  con- 
tract.   Hikey's  defense  to  the  Story  Case  is  effective. 


(7)     A  General  Offer  May  Be  Restricted  in  Acceptance 

STORY  CASE 

The  Baily  Mills  Company  inserted  the  following  ad- 
vertisement in  the  county  newspaper : 

**In  order  to  get  our  name  before  the  people,  we 
are  offering  to  the  farmers  of  Fayette  County, 
seed  corn  at  the  nominal  price  of  25c  a  bushel. 

The  Baily  Mills  Co.*' 

Morgan  Lindsey,  a  farmer,  who  lived  just  over  the 
Fayette  County  line  in  Eoss  County,  saw  the  advertise- 
ment and  ordered  50  bushels  of  the  corn.  The  mills 
company  refused  to  deliver  it,  claiming  that  the  offer 
had  not  been  made  to  him.  Lindsey  claimed  that  the 
offer  was  made  to  whomever  should  read  the  paper. 
Which  party  should  \vin  the  case  when  Lindsey  sued 
for  breach  of  contract? 


CONTKACTS  151 

EULING  COURT  CASE 

Ryer  vs.  Stockwell,  Volume  14  California  Reports, 
Page  134 ;  Volume  73  American  Decisions,  Page  634. 

On  the  morning  of  June  18,  1856,  Stockwell 's  house 
in  the  city  of  Stockton  was  burned.  He  suspected  that 
it  was  the  act  of  an  incendiary.  Accordingly,  he  pub- 
lished in  a  newspaper  the  offer  of  a  reward  for  any  in- 
formation which  would  lead  to  the  arrest  and  convic- 
tion of  the  person  or  persons  who  did  the  act.  Ryer 
saw  and  read  the  offer  and  immediately  made  plans 
to  discover  the  information  necessary  to  lead  to  the 
arrest  and  conviction  of  the  guilty  party.  After  some 
efforts  he  did  procure  evidence  which  resulted  in  the 
arrest  and  conviction  of  the  person  who  had  set  fire  to 
the  house,  but  Stockwell,  although  requested,  refused 
to  pay  the  offered  reward  to  Ryer.  Thereupon,  Ryer 
sued  him  for  the  money. 

The  defense  of  Stockwell  consisted  in  the  fact  that 
he  had  never  made  any  offer  to  Ryer. 

Decision :  An  offer  which  is  published  generally,  is 
an  offer  to  any  and  every  one  who  has  read  or  knows 
of  the  existence  of  the  same;  no  restrictions  exist. 
Ryer  read  the  offer  in  a  newspaper,  and  in  reliance 
thereon,  performed  all  the  conditions  necessary  to  en- 
title him  to  the  reward.  This  was  an  acceptance  on  his 
part,  and,  thereupon,  Stockwell  became  legally  bound 
to  pay  to  him  the  offered  reward.  Had  Stockwell 
chosen,  he  could  have  originally  restricted  his  offer. 

Mr.  Justice  Baldwin,  in  the  opinion  of  the  Court 
quoted  from  a  Massachusetts  case,  as  governing  this 
case:  ''There  is  now  no  question  of  the  correctness 
of  the  legal  principle  on  which  this  action  is  founded. 
The  offer  of  a  reward  for  the  detection  of  an  offender. 


152  CONTRACTS 

the  recovery  of  property,  and  the  like,  is  an  offer  or 
proposal  on  the  part  of  the  person  making  it,  to  all 
persons,  which  any  one,  capable  of  performing  the  ser- 
vice, may  accept  at  any  time  before  it  is  revoked,  and 
perform  the  service;  and  snch  offer  on  one  side,  and 
acceptance  and  performance  of  the  service  on  the 
other,  is  a  valid  contract,  made  on  good  consideration, 
which  the  law  will  enforce." 

Judgment,  therefore,  was  given  for  Ryer  in  this  ac- 
tion. 

EXTUNG  LAW 
Story  Case  Answer 

Offers  of  rewards  for  the  capture  and  return  of 
criminals  are  examples  of  general  offers.  Any  one  who 
performs  the  act  desired,  in  reliance  upon  the  offer, 
is  entitled  to  the  reward.  In  the  Story  Case,  how- 
ever, the  offer  was  not  to  the  whole  public,  but  to  the 
public  of  Fayette  County.  Any  resident  of  the  county 
was  entitled  to  accept  the  offer,  but  it  did  not  extend 
to  any  one  living  out  of  the  boundary.  Consequently, 
the  acceptance  of  Lindsey  was  of  no  effect.  Judgment 
should  be  given  for  the  Baily  Mills  Company. 


(8)     Acceptance  May  Be  One  of  Two  Kinds 

a.     Acceptance  May  Be  by  a  Promise 

STOEY  CASE 

Jen  &  Company,  dealers  in  school  books,  was  nego- 
tiating for  its  season's  supply  of  books  when  the  Ply- 
mouth Press  wrote  it  the  following  letter: 


CONTRACTS  153     X 

'^January  1,1915. 
We  offer  to  furnish  you  for  the  season  of  Jan- 
uary, February,  and  March  all  the  books  you  may 
want  of  our  manufacture  for  fifty  cents  a  book,  in 
return  for  your  promise  to  pay  cash. 

(Signed)    The  Plymouth  Press." 

Jen  &  Company  answered : 

*'TVe  hereby  accept  the  offer  made  by  The  Ply- 
mouth Press  on  January  1,  for  the  season  of 
January,  February  and  March. 

(Signed)    Jen  &  Company.'* 

On  February  10,  1915,  The  Plymouth  Press  wrote 
to  Jen  &  Company  notifying  them  that  the  price  of 
books  was  sixty  cents  per  copy  wholesale  for  future 
delivery.  Thereupon,  Jen  &  Company  ordered  two 
hundred  books,  demanding  that  the  Plymouth  Press 
sell  them  under  the  price  of  fifty  cents  per  copy  as 
per  contract.  The  Plymouth  Press  contended  that  no 
contract  existed,  since  there  was  a  lack  of  a  promise 
from  Jen  &  Company  to  buy  any  books;  that 
therefore,  only  an  offer  existed  from  the  Plymouth 
Press  which  it  could  withdraw  at  any  time  before  ac- 
ceptance.   Is  this  a  good  defense? 

BXTUNQ  OOUET  CASE 

Muscatine  Water  Company  vs.  Muscatine  Lumber 
Company,  Volume  85  loiva  Reports,  Page  112;  Volume 
39  American  State  Reports,  Page  284. 

The  Muscatine  Lumber  Company  owned  and  oper- 
ated a  saw  mill  on  the  outer  limits  of  the  city  of  Mus- 
catine. They  were  so  located  that  they  were  without 
fire  protection.    Negotiations  were  had  with  the  Mus- 


154  CONTEACTS 

catine  Water  Company  by  which  the  latter  extended  its 
mains  to  the  plant  of  the  lumber  company  upon  its 
promise  to  pay  the  smn  of  $250  annually  for  ten  years 
from  that  date.  The  lumber  company  agreed  to  this 
condition  and  the  main  was  extended.  In  pursuance 
of  the  terms  of  their  agreement,  the  lumber  company 
paid  the  sum  stipulated  for  a  period  of  four  years, 
.when  its  mill  and  other  buildings  were  destroyed  by 
fire.  It  did  not  rebuild,  and  accordingly,  refused  to 
continue  to  pay  the  annual  sum  agreed  upon.  The 
water  company  thereupon  brought  this  action  to  re- 
cover it. 

It  was  contended  by  the  lumber  company  that  there 
was  no  contract,  for  they  had  never  accepted  the  offer 
of  the  water  company. 

Decision:  There  was  a  binding  contract  between 
the  parties  to  the  agreement.  The  promise  of  the 
lumber  company  to  pay  a  certain  annual  sum  consti- 
tuted an  acceptance  of  the  offer  by  the  water  com- 
pany to  extend  the  main.  Each  party  promised  to  do 
a  particular  act  and  this  resulted  in  a  binding  contract 
between  the  two  parties. 

Therefore,  judgment  was  given  for  the  water  com- 
pany in  this  action. 

RULINO  LAW 
Story  Case  Answer 

A  person  may  make  an  offer  which  contemplates  ao 
ceptance  by  a  promise.  When  such  an  offer  is  made, 
and  the  person  to  whom  it  is  made  gives  the  promise, 
this  constitutes  an  acceptance,  and  completes  the  con- 
tract. 

This  is  true,  provided  the  offer  is  made  in  such  a 
manner  that  the  acceptance  by  a  promise  is  definite 


CONTRACTS  155 

and  certain,  obligating  the  acceptor  to  do  something 
in  the  future.  This  is  determined  by  the  test  of  mutu- 
ality; we  ask,  can  the  offeror  under  the  alleged  con- 
tract hold  the  acceptor  to  account  in  a  law  suit  f  If  he 
cannot,  a  contract  does  not  exist.  In  the  Story  Case, 
had  the  Plymouth  Press  attempted  to  hold  Jen  &  Com- 
pany to  the  original  contract  or  apparent  contract,  the 
Court  would  have  said:  No  contract  exists,  because 
Jen  &  Company  merely  promised  to  buy  all  the  books 
it  might  want;  it  was  under  no  obligation  by  its 
promise  to  buy  anv  books  at  alL  Therefore,  since  there 
was  a  lack  of  mutuality  of  promises,  Jen  &  Company 
cannot  hold  the  Plymouth  Press  to  the  order  for  two 
hundred  books.  The  defense  of  the  Plymouth  Press 
is  effective. 


b.    An  Acceptance  May  Be  an  Act 
STOBY  CASE 

K.  L.  McFadden  lost  his  pedigreed  buU  dog.  He  in- 
serted the  following  advertisement  in  the  daily  paper : 

50  DOLLARS  REWARD 
I  wiU  pay  $50  to  the  person  who  returns  my  bull 
dog  before  the  expiration  of  thirty  days. 

(Signed)    K.  L.  McFadden." 

Henry  Greenup  saw  the  notice  and  asserted  to  Mc- 
Fadden that  he  was  determined  to  search  for  and  find 
the  dog.  After  hunting  for  twenty-six  days,  just  when 
certain  clues  seemed  to  augur  success,  he  saw  this  in 
the  paper: 

**I  have  found  that  my  dog  was  not  pedigreed 
and  I,  therefore,  withdraw  my  offer  of  reward. 
(Signed)    K.  L.  McFadden." 


156  CONTRACTS 

Greennp  went  to  McFadden  and  told  him  that  he  had 
spent  twenty-six  days  looking  for  the  dog  and  was  en- 
titled to  some  remuneration,  because  he  would  prob- 
ably have  found  the  dog  before  the  expiration  of 
the  thirty  days.  McFadden  refused  to  pay  him  any- 
thing, on  the  ground  that  the  dog  was  not  returned. 
Greenup  brought  suit  against  McFadden  and  alleged 
that  he  accepted  McFadden 's  offer  of  reward  by  prom- 
ising to  find  the  dog.    Which  should  win  the  suit? 

EUUNG  COURT  CASE 

Des  Moines  Valley  Raihvay  Company  vs.  Graff,  Vol- 
ume 27  Iowa  Reports,  Page  99;  Volume  1  American 
Reports,  Page  256. 

In  April  of  1864,  Graff,  among  other  citizens  of 
Pella,  agreed  'Ho  obtain  and  to  secure  subscriptions 
to  the  capital  stock  of  the  Des  Moines  Valley  Railway 
Company,  in  accordance  with  blank  forms  furnished  by 
the  company,  to  an  amount  of  at  least  ten  thousand 
dollars,  provided  that  said  company  runs  its  tracks 
through  Pella,  as  heretofore  surveyed."  About 
$10,000  in  subscriptions  was  obtained  on  these 
promissory  notes,  and  the  railroad  company  con- 
structed its  road  along  the  route  originally  surveyed 
through  Pella.  When  they  had  finished  the  work, 
Graff  refused  to  deliver  these  notes  which  had  been 
procured  for  the  benefit  of  the  road.  The  company, 
thereupon,  brought  this  suit  to  recover  them. 

The  defense  of  Graff  consisted  in  the  fact  that  the 
offer  of  the  citizens  of  Pella  was  never  accepted,  and 
that,  therefore,  no  contract  was  ever  made  and  com- 
pleted between  them. 

Decision :  The  offer  of  the  citizens  of  Pella  was  to 
furnish  at  least  $10,000,  evidenced  by  notes,  if  the  com- 


CONTRACTS  157 

pany  would  build  its  road  through  Pella.  The  comple- 
tion of  the  building  of  the  road  by  the  company,  in  re- 
liance upon  the  notes  to  be  obtained,  was  an  acceptance 
of  the  offer  of  the  citizens.  This  made  a  binding  con- 
tract between,  and  the  company  is  entitled  to  the  notes. 

Mr.  Justice  AYright  said  in  part:  ''Then  as  to  the 
want  of  mutuality  and  a  consideration,  it  is  plain  that, 
if  A  promise  to  pay  B  a  sum  of  money  if  he  will  do 
a  particular  act,  and  B  does  that  act,  A  is  liable  though 
B  did  not  at  the  time  engage  to  do  the  act ;  for,  upon 
performance  of  the  condition  by  the  promisee,  the  con- 
tract is  clothed  with  a  valid  consideration,  which  re- 
lates back,  and  the  promise  at  once  becomes  binding. ' ' 

Therefore,  judgment  was  given  for  the  railroad 
company. 

RULING  LAW 
Story  Case  Answer 

An  offer  may  be  made,  which  contemplates  accept- 
ance, by  an  act.  In  such  a  case,  nothing  less  than 
the  doing  of  the  act  will  ever  amount  to  an  acceptance 
of  the  offer.  When  the  act  contemplated  has  been 
done,  the  contract  becomes  complete,  and  the  rights 
of  the  party  thereunder  become  fixed  at  that  time.  In 
the  Story  Case,  the  offer  made,  contemplated  accept- 
ance by  the  return  of  the  dog.  Consequently,  the 
promise  of  Greenup  to  find  the  dog  did  not  constitute 
an  acceptance  of  the  offer.  Judgment  should  be  given 
for  McFadden. 

(9)     The  Power,  But  Not  the  Right,  to  Withdraw  an 

Offer,  Exists  After  Acceptance 

STORY  CASE 

Deebe  Fraser  said  to  his  nephew : 


158  CONTRACTS 

"If  you  will  make  a  trip  to  the  Mardi  Gras 
Festival  in  New  Orleans,  I  will  pay  yonr  expen- 
ses." 
The  nephew,  John  Fraser,  said  that  he  would  make 
the  trip  and  he  started  to  prepare  himself.    He  pur- 
chased a  new  suit  of  clothes  that  he  would  not  other- 
wise have  bought ;  he  applied  for  and  received  a  vaca- 
tion; he  purchased  his  ticket  and  sleeper  to  New  Or- 
leans.   Then  his  Uncle  said : 

**I  have  changed  my  mind.  If  you  wr.nt  to  go 
to  the  Festival  you  must  finance  the  trip  your- 
self." 

John  Fraser  insisted  that  Deebe  pay  for  the  ex- 
penses he  had  already  incurred  in  preparation  for  the 
trip  and  Deebe  refused  to  do  so.  John  thought  that 
it  was  fair  that  Deebe  pay  for  the  damage  that  had 
accrued  to  him  because  of  Deebe 's  change  of  mind  and 
he  brought  suit  for  breach  of  contract.  Deebe  de- 
fended, on  the  ground  that  his  oifer  had  not  been  ac- 
cepted before  withdrawal.    Is  this  defense  good  1 

RULING  COURT  CASE 

Fisher  vs.  Seltzer,  Volume  23  Pennsylvania  State 
Reports,  Page  308;  Volume  62  American  Decisions, 
Page  335. 

Fisher  was  sheriff  and,  in  the  performance  of  his 
duties,  was  preparing  to  auction  off  certain  property 
under  an  execution  sale.  Before  the  sale  began,  the 
sheriff  prescribed  certain  rules  or  conditions  to  govern 
the  sale;  one  of  these  was  that  "no  person  shall  re- 
tract his  or  her  bid."  At  the  sale  Seltzer  bid  $7,000 
for  the  land  in  question,  under  the  belief  that  it  was 
to  be  sold  free  of  a  certain  mortgage  on  it  for  $6,000. 


CONTKACTS  159 

When  he  discovered  his  mistake,  he  retracted  his  bid 
before  the  auctioneer,  the  sheriff,  had  declared  him  to 
be  the  highest  bidder.  The  sheriff  refused  to  recognize 
his  right  to  withdraw  his  offer,  and  declared  him  the 
highest  and  last  bidder,  and  demanded  the  money 
therefor.    Unable  to  get  it,  he  brought  suit. 

Seltzer  insisted  that  no  contract  was  made  between 
them,  because  his  bid  was  only  an  offer,  which  might 
be  withdrawn  at  any  time  before  it  was  accepted. 

Decision:  The  bid  of  Seltzer  was  only  an  offer  to 
buy  the  property  at  that  price.  Until  his  offer  was  ac- 
cepted by  the  sheriff,  it  remained  a  simple  offer,  which 
might  be  revoked.  Before  it  was  accepted,  he  did  re- 
voke it,  and  no  contract  resulted.  This  is  true,  even 
though  the  sheriff  expressly  stated  that  no  bids  might 
be  withdrawn ;  he  had  no  right  to  bind  the  bidders  by 
such  a  rule.  Before  acceptance,  there  is  both  the  right 
and  the  power  to  withdraw  an  offer.  This  is  distin- 
guished from  the  relationship  after  acceptance  when 
the  right  to  withdraw  is  gone. 

Mr.  Justice  Lewis  said:  "Mutuality  is  so  essential 
to  the  validity  of  contracts  not  under  seal  that  they 
cannot  exist  without  it.  A  bid  at  an  auction,  before 
the  hammer  falls,  is  like  an  offer  before  acceptance. 
In  such  a  case,  there  is  no  contract  and  the  bid  may  be 
withdrawn  by  right  without  liability  or  injury  to  any 
one,  if  done  before  the  hammer  falls." 

Judgment  was,  therefore,  given  for  Seltzer  in  this 
action. 

EXJUNO  LAW 
Story  Case  Answer 

The  maker  of  an  offer  has  the  right  to  withdraw  the 
offer  before  it  is  accepted.    After  it  is  accepted  and 


160  CONTRACTS 

the  contract  is  completed,  the  right  to  withdraw  is 
gone.  But  the  power  to  withdraw  still  exists,  just  as 
one  has  the  power  to  injure  another,  although  not  the 
right.  In  the  Story  Case,  there  was  an  acceptance  by 
Frazer  in  his  statement  that  he  would  make  the  trip. 
Thereafter,  Deebe  Frazer  had  not  the  right  to  with- 
draw. But  although  he  had  not  the  right  to  break  his 
contract,  he  has  still  power  to  do  so  and  became  liable 
for  the  damages  incurred  by  the  other  to  that  time,  in 
reliance  on  the  contract.  Therefore,  John  Fraser  can 
recover  for  the  losses  incurred  to  the  time  when  Deebe 
changed  his  mind. 


C.     There  Must  Be  Contractual  Intention 

(1)     The  Parties  Must  Intend  to  Bind  Each  Other  in  a 

Legal  Manner 

STORT  CASE 

Harry  Arlington,  a  club  man  in  Chicago,  invited  his 
friend,  Bagby  Smith,  to  a  reception  to  be  given  by  Ar- 
lington in  his  exclusive  club.  Smith  had  no  evening 
clothes  but,  in  view  of  the  invitation,  he  purchased  a 
suit.  He  knew  that  he  would  have  no  more  use  for 
it,  since  he  was  leaving  for  the  South  Sea  Islands  im- 
mediately after  the  reception. 

On  the  day  preceding  the  social  event.  Smith  and 
Arlington  had  a  misunderstanding  which  resulted  in 
a  serious  quarrel.  Arlington  then  angrily  withdrew 
his  invitation  to  the  reception  and  warned  Smith  not 
to  impose  his  presence  upon  him  socially,  on  the  fol- 
lowing evening.  Smith  replied,  by  demanding  a  recom- 
pense for  the  dress  suit  he  had  been  under  expense  to 
purchase.    Arlington  refused  to  consider  it. 


CONTRACTS  161 

Smith,  immediately,  brought  suit  for  breach  of  con- 
tract.   Should  he  be  allowed  to  recover  ? 

EULINa  COUET  CASE 

Charles  Bruce  vs.  James  Bishop,  Volume  43  Ver- 
mont Reports,  Page  161. 

James  Bishop  and  one  Sleeper  traded  cows. 
Sleeper,  feeling  that  he  was  cheated  in  the  transaction, 
sued  Bishop  for  damages.  While  this  suit  was  pend- 
ing in  the  Court,  Charles  Bruce,  employed  by  Sleeper, 
met  Bishop,  and  the  conversation  turned  to  the  recent 
cow  transaction.  Bruce  remarked  that  both  cows  to- 
gether were  not  worth  $35.  This  statement  angered 
Bishop,  who  then  said  that  the  one  cow  which  he  traded 
to  Sleeper  was  worth  at  least  $35.  Bruce  laughed 
at  this  sally;  Bishop  thereupon  boasted:  **I  will  give 
you  $40  for  the  cow  if  you  will  deliver  her  to  me  in 
as  good  condition  as  when  I  traded  her  to  Sleeper." 
Bruce  went  away,  expressing  his  intention  to  get  the 
cow  arid  bring  her  to  Bishop.  Accordingly,  he  pur- 
chased the  animal  from  Sleeper  for  $15  and  drove 
her  to  Bishop's  home.  The  latter  refused  to  take  her, 
although  it  appeared  that  she  was  in  just  as  good  con- 
dition as  when  she  was  traded  to  Sleeper.  Thereupon, 
Bruce  brought  this  action  for  damages,  alleging  that 
Bishop  had  made  a  contract  with  him  and  that  he  re- 
fused to  perform  it. 

The  defense  of  Bishop  consisted  in  the  fact  that  he 
did  not  intend  to  make  any  such  contract,  and  that 
Bruce  knew  that  he  was  merely  boasting,  under  the 
sting  of  the  other 's  raillery. 

Decision :  Although  parties  may  fulfill  the  form  of 
making  a  contract,  unless  they  have  the  intention  to 


162  CONTEACTS 

enter  into  a  legally  binding  contract,  the  form  has  no 
effect.  In  this  case,  the  circumstances  show  that 
Bishop  never  really  intended  to  repurchase  the  cow; 
and  Bruce  liimself  was  only  bantering,  and  he  knew 
that  Bishop  did  not  really  intend  to  enter  into  such  a 
contract. 

Mr.  Justice  "Wheeler  said:  "Bishop  and  Sleeper 
were  in  litigation  about  the  cow,  and  Bruce  was  in  the 
employment  of  Sleeper  at  the  time  when  the  parties 
met.  Their  conversation  commenced  in  the  way  of 
bantering  between  them  about  the  importance  of  that 
litigation,  and  not  in  the  way  of  making  a  trade  in  the 
usual  course  of  business.  "VVe  think  that  the  circum- 
stances and  testimony  tended  to  show  that  Bishop's 
offer  was  not  in  earnest  and  so  understood  by  Bruce.'* 

Judgment  was,  therefore,  given  for  Bishop  in  this 
case. 

RULING  LAW 
Story  Case  Answer 

It  is  essential  to  the  validity  of  an  agreement  that 
there  be  a  contractual  intention.  The  parties  must 
intend  to  bind  each  other  in  a  legal  manner.  When 
a  person  invites  another  to  dinner,  and  the  invitation 
is  accepted,  it  is  obvious  that  neither  intended  that 
such  a  transaction  should  be  considered  a  legally  bind- 
ing one.  This  is  true  in  the  Story  Case ;  it  is  quite  evi- 
dent that  it  was  never  intended  that  Arlington  should 
be  legally  bound  to  have  Smith  at  his  reception. 
Therefore,  Smith  is  not  entitled  to  recover  any  dam- 
ages. The  lack  of  contractual  intention  may  also  be 
apparent  from  the  conduct  of  the  parties.  Words  are 
generally  indicative  of  a  person's  intention;  but  if 
back  of  the  words,  we  see  a  lack  of  contractual  inten- 


CONTRACTS  163 

tion,  the  words  are  not  material,  if  they  have  not  mis- 
led either  party.  In  the  Court  Case  of  Bruce  vs. 
Bishop,  the  words  would  seem  to  indicate  contractual 
intention.  But  the  circumstances  and  conduct  of  both 
parties  clearly  showed  that  there  was  no  contractual 
intention. 


(2)     Relationship  or  Membership  in  a  Family  Indicates 

Lack  of  Contractual  Intention 

STOEY  CASE 

When  Harold  Bingham,  a  young  man  of  twenty-two 
years  returned  from  college  in  June,  1914,  his  father 
said:  *'Well,  Harold  try  yourself  with  the  plow;  let 
us  see  whether  school  has  been  worth  while  for  you." 
Harold  worked  at  the  plow  throughout  the  summer, 
and  lived  at  his  father's  house.  When  the  autumn 
came,  and  he  was  ready  to  return  to  school,  he  asked 
his  father  for  $200  to  spend  during  the  year.  The 
father  answered:  *'Well,  son,  you  earned  your 
way  through  college  last  year,  and  I  think  it  is  best  for 
you  to  do  this  again.  Try  it."  The  son  was  incensed 
at  his  father's  refusal  to  pay  the  money  and  brought 
suit  on  contract  for  the  reasonable  value  of  his  ser- 
vices rendered  during  the  summer.    Can  he  recover  ? 

EUUNG  COURT  CASE 

Dishrow  vs.  Durand,  Volume  54  New  Jersey  Law 
Reports,  Page  343;  Volume  33  American  State  Re- 
ports, Page  678. 

Sarah  Disbrow  and  her  brother  resided  together 
with  their  mother  on  a  farm,  as  one  family.  After 
the  mother's  death,  the  brother  and  sister  continued  to 
reside  together  until  his  decease.    During  his  lifetime, 


164  CONTRACTS 

he  tilled  the  farm,  and  the  sister  kept  the  house,  having 
no  other  means  of  support  except  to  work  for  strang- 
ers. No  express  contract  existed  upon  the  part  of  the 
brother  to  remunerate  the  sister  for  her  services  in 
the  household,  nor  was  the  subject  of  compensation 
ever  discussed  or  contemplated  by  either  of  them. 
After  his  death  she  sued  Durand,  the  personal  repre- 
sentative of  her  brother,  for  services  which  she  had 
rendered  during  his  lifetime. 

It  was  insisted,  on  behalf  of  Durand,  that  no  con- 
tract, either  express  or  implied,  existed,  because  the  re- 
lationship which  existed  between  the  two  indicated  that 
there  was  no  intention  that  she  should  be  paid. 

The  Chancellor  said :  *  *  Ordinarily,  where  services 
are  rendered  and  voluntarily  accepted,  the  law  mil  im- 
ply a  promise  upon  the  part  of  the  recipient  to  pay  for 
them;  but  where  the  services  are  rendered  by  mem- 
bers of  a  family,  living  as  one  household,  to  each  other, 
there  wiU  be  no  implication  from  the  mere  rendition 
and  acceptance  of  the  services.  In  order  to  recover 
for  the  services,  the  plaintiff  must  show,  either  that  an 
express  contract  for  the  remuneration  existed,  or  that 
the  circumstances  under  which  the  services  were  ren- 
dered were  such  as  exhibit  a  reasonable  and  proper 
expectation  that  there  would  be  compensation. ' ' 

In  accordance  with  the  opinion,  the  Court  decided 
that  the  sister  could  recover  nothing  for  the  services 
which  she  rendered  to  her  brother  during  his  lifetime. 

EUUNa  LAW 
Story  Case  Answer 

When  a  person  performs  services  at  the  request  of 
another,  and  nothing  is  said  about  compensation,  the 
law  implies  an  intention  on  the  part  of  the  recipient  of 


CONTRACTS  165 

snch  services  to  pay  the  reasonable  value  thereof  to 
the  one  who  performs  them.  But  when  a  person  per- 
forms such  services  for  a  person  closely  related  to  him, 
the  fact  of  the  existing  relationship  is  evidence  that 
there  was  no  contractual  intention  to  pay  for  the  ser- 
vices. This  relationship  is,  in  fact,  evidence  of  an  in- 
tentipn  that  the  services  shall  be  gratuitous.  If  a 
stranger  should  ask  me  to  spade  his  garden,  the  law 
would  imply  an  intention  on  his  part  to  pay  for  the 
services.  But  if  my  father  asks  me  to  do  the  same 
act,  the  law  does  not  imply  any  such  promise  on  the 
part  of  my  father.  The  relationship,  which  exists, 
shows  that  there  was  no  intention  that  the  act  should 
be  the  basis  of  a  legally  binding  contract.  In  the  Story 
Case,  Harold  cannot  recover. 


(3)     An  OfiFer  Made  in  Jest  Cannot  Be  Accepted  in  a 
Legal  Sense 
STOEY  CASE 

As  "Wright  Shannon  walked  along  the  street  one  day 
in  December,  some  practical  joker  knocked  off  his  hat 
with  a  snowball.  Shannon  became  very  angry,  but 
when  he  learned  that  it  had  been  done  by  the  son  of  a 
neighbor,  he  decided  to  frighten  the  boy  thoroughly. 
He  went  to  the  neighbor's  house,  and  signing  to  the 
father  of  his  purpose,  said  in  the  boy's  presence: 

**Some  one  knocked  my  hat  off  with  a  snow  ball  this 
morning.  I  offer  $15  for  the  name  of  the  person,  for  I 
want  to  put  him  in  jail." 

Mr.  New,  the  boy's  father  did  not  take  the  offer  in 
the  spirit  in  which  it  was  given,  but  said  to  Shannon, 
"I  accept  your  offer.    My  son,  James  New,  threw  that 


1^6  CONTRACTS 

snowball.  Please  pay  the  fifteen  dollars.''  Shannon 
refused  to  pay  anything  and  New  brought  suit  to  re- 
cover.   "What  will  the  court  do  ? 

RULING  COURT  CASE 

Keller  vs.  Holderman,  Volume  11  Michigan  Reports, 
Page  248 ;  Volume  83  American  Decisions,  Page  12>1. 

Keller  and  Holderman  were  jesting  with  each  other 
one  day,  and  Holderman  offered  to  Keller  $300  for 
a  watch  owned  by  the  latter.  He  never  really  intended 
to  buy  the  watch,  for  it  was  worth  only  about  $15. 
Keller  understood  that  it  was  only  a  joke  and  treated 
the  oifer  as  such.  However,  he  agreed  to  sell  the 
watch  for  that  price,  and  gave  it  over  to  Holderman. 
Holderman  wrote  out  a  note  promising  to  pay  to  Kel- 
ler or  order  the  sum  of  $300.  Several  months 
passed,  and  no  more  was  said  about  the  transaction. 
Then  Keller  presented  the  note  and  demanded  pay- 
ment. Holderman  refused  to  pay  it.  Thereupon,  Kel- 
ler sued  him  on  the  note. 

Holderman  contended  that  he  was  not  liable  upon 
the  note  because  he  had  made  the  offer  in  a  jesting 
manner,  and  there  was  never  any  intention  on  his  part 
to  enter  into  such  a  contract,  and  that  Keller  knew 
that  he  was  merely  jesting. 

Decision:  In  order  to  constitute  a  legally  binding 
contract  between  parties,  they  must  have  the  necessary 
contractual  intention.  Thus  an  offer  made  by  one  in 
jest  and  accepted  by  another,  who  knows  that  it  was 
made  in  jest,  does  not  result  in  a  binding  contract.  All 
the  circumstances  of  this  case  show  that  Holderman 
had  not  the  least  intention  of  giving  $300  for  a 
$15  watch  and  Keller,  when  he  accepted  the  offer 


CONTRACTS  167 

and  received  the  note  in  question,  knew  that  Holder- 
man  was  not  in  earnest.  It  follows  that  no  contract 
was  made. 

Therefore,  the  Court  gave  judgment  for  the  defend- 
ant, Holderman. 

EUIilNG  LAW 
Story  Case  Answer 

Where  words  are  viewed  in  the  light  of  the  snrronnd- 
ing  circmi^stances  and  in  the  light  of  the  conduct  of 
the  parties,  and  indicate  mere  idle  talk  or  jest,  and 
are  so  understood  by  both  persons,  they  cannot  become 
the  basis  of  a  contract.  In  the  Court  Case  of  Keller- 
man  vs.  Holderman,  from  the  circumstances,  it  is  per- 
fectly apparent  that  neither  person  intended  to  enter 
into  such  a  contract  as  was  sought  to  be  enforced ;  and 
it  is  clear  that  both  parties  understood  that  there  was 
no  intention  that  a  legally  binding  contract  was  to  re- 
sult from  their  jesting  transaction.  The  same  may  be 
said  of  the  Story  Case;  both  parties  understood  that 
their  talk  was  mere  jest  and  banter ;  thus,  no  contract 
resulted  therefrom.  Consequently,  Mr.  New  can  re- 
cover nothing  from  Mr.  Shannon. 


(4)     A  Proposal  Made  Without  Intention  to  Contract 

Cannot  Be  Accepted  in  a  Legal  Sense 

STORY  CASE 

Bernard  Buck  had  planted  in  his  back  yard  some 
sweet  peas,  of  which  he  was  very  fond.  One  morning 
he  found  that  some  unprincipled  person  had  torn  them 
up.    He  became  very  angry  and  shouted : 

''I'd  give  $500  to  know  who  did  this." 


168  CONTRACTS 

A  neighbor  heard  the  statement,  and  immediately  be- 
gan to  search  for  the  person.  Five  days  later,  the 
neighbor  found  the  guilty  person  and  demanded  his 
reward.  This  Buck  refused  to  pay.  The  neighbor 
brought  suit  for  breach  of  contract.    May  he  recover? 

EULING  COUET  CASE 

Temper  vs.  Stamper,  Volume  6  HumpJirey's  Ten- 
nessee Reports,  Page  113 ;  Volume  44  American  Decis- 
ions, Page  296. 

The  son  of  Stamper  was  killed,  and  he  himself  was 
severely  wounded  by  two  men.  On  the  evening  after 
the  unfortunate  affray,  there  was  great  confusion  in 
his  home;  the  knowledge  of  the  son's  death  had  pros- 
trated his  wife  and  daughter;  keen  bodily  pain  from 
wounds,  and  his  unbearable  mental  anguish  made 
Stamper  himself  almost  unaccountable ;  many  friends 
and  curious  people  added  to  the  great  disturbance  by 
assembling  in  the  house  and  about  the  yard  to  discuss 
the  arrest  of  the  fugitive.  When  this  uproar  was  at 
its  height.  Stamper  walked  into  the  yard  with  difficulty 
and  entered  into  conversation  with  the  group  there,  by 
saying  that  he  would  give  two  hundred  dollars  to  any 
person  who  would  apprehend  the  two  men  in  question. 
To  this  remark,  one  of  the  company  replied:  **Mr. 
Stamper,  I  do  not  want  your  money."  To  this,  Mr. 
Stamper  said  '* Gentlemen,  I  did  not  mean  it  for  you.'* 
Nothing  further  was  said  concerning  the  offer  that 
night.  A  few  days  later,  Temple,  who  was  present  that 
evening,  was  instrumental  in  having  the  criminal  ar- 
rested. He  demanded  the  reward  and  Stamper  re- 
fused to  pay  it. 

Stamper  insisted  that  he  did  not  actually  intend 
those  remarks  of  his  that  night  as  an  offer  of  a  re- 


CONTEACTS  169 

ward  in  a  legal  sense;  he  claimed  that  it  was  a  mere 
expression  of  strong  feeling  on  his  part. 

Mr.  Justice  Turley,  who  delivered  the  opinion  of  the 
Court  said:  *'We  are  constrained  to  believe  that  what 
is  called  an  offered  reward  of  $200,  was  nothing  but 
a  strong  expression  of  liis  feelings  of  anxiety  for  the 
arrest  oi'  those  who  had  so  severely  injured  him,  and 
this  greatly  increased  by  the  distracted  state  of  his 
own  mind,  and  that  of  his  family;  as  we  frequently 
hear  persons  exclaim:  *0h,  I  Avould  give  a  thousand 
dollars  if  such  an  event  were  to  happen,  or  vice  versa.  * 
No  contract  can  be  made  out  of  such  expressions ;  they 
are  evidence  of  strong  excitement,  but  not  of  a  con- 
tracting intention. ' ' 

Therefore,  the  Court  was  of  opinion  that  judgment 
should  be  given  to  Stamper  in  this  action. 

EULING  LAW 
Story  Case  Answer 

An  offer  made  by  a  person,  who  has  no  intention 
to  contract,  cannot  be  accepted  by  a  person  in  a  legal 
sense,  provided  the  latter  was  not  misled  by  the  offer. 
In  the  Court  Case  of  Temper  vs.  Stamper,  it  is  clear 
that  every  one  who  heard  the  offer,  under  the  circum- 
stances, understood  that  it  was  the  mere  utterance  of 
a  man  highly  excited,  and  was  not  actuated  by  a  legal 
intention  to  contract.  In  the  Story  Case,  the  words 
would  seem  to  indicate  that  Buck  really  intended  to 
make  an  offer,  but  when  taken  in  connection  with  the 
circumstances,  it  is  perfectly  apparent  that  the  words 
were  prompted,  not  by  a  contractual  intention,  but  by 
strong  feelings  of  anger  over  a  sUght  matter. 


170  CONTEACTS 

(5)     A  Proposal  Made  Without  Contractual  Intention  May 

Be  Accepted,  in  Case  the  Other  Reasonably 

Believes  That  It  Is  Made  in  Earnest 

STOET  CASE 

Someone  had  entered  the  First  National  Bank  and 
had  scattered  papers  over  the  floor  and  spilled  ink. 
The  directors  learned  that  the  mischievous  son  of  the 
president  had  done  it,  and,  with  the  consent  of  the 
president,  and  mth  the  purpose  of  scaring  the  boy, 
they  inserted  the  following  in  the  daily  newspaper : 

*'We  will  pay  anyone  $50  if  he  will  tell  us  the 
name  of  the  desperate  robber  who  broke  into  the 
bank  last  Monday  and  destroyed  valuable  papers 
there. 

(Signed)    The  Directors." 

The  Pinkerton  Agency  sent  a  man  to  investigate  the 
case.  After  several  days,  he  discovered  that  it  was  the 
son  of  the  president  and  so  informed  the  directors. 
They  refused  to  pay  him  the  reward,  on  the  grounds 
that  the  offer  was  a  joke.  The  Pinkertons  sued  the 
bank  for  $50.    May  they  recover  ? 

RULING  COURT  CASE 

McClure  vs.  Wilson,  Volume  50  Illinois  Reports, 
Page  366. 

At  a  public  meeting,  during  the  Civil  War,  Wilson 
declared  that  he  would  give  four  hundred  dollars  to  any 
man  who  could  promise  for  his  sons  a  relief  from  the 
government  draft  for  soldiers.  In  reliance  upon  this 
offer,  McClure  was  instrumental  in  securing  substi- 
tutes, but  when  he  demanded  this  money,  Wilson  re- 
fused to  pay. 

Justice  Breen  gave  the  opinion  of  the  court : 


CONTRACTS  171 

"It  was  reasonable  for  McClure  to  believe  that  Wil- 
son made  an  offer  which  he  intended  shall  bind  him 
upon  acceptance  by  a  third  party.'' 

Said  the  court :  * '  If  I  have  valuable  property  in  im- 
minent danger  and  I  make  a  proclamation  that  I  will 
give  fifty  dollars  to  save  it,  and  a  stranger  undertakes 
the  labor  and  does  save  it,  on  what  principle  of  law 
or  justice  is  it  that  I  should  not  pay?" 

Judgment  is  given  for  McClure  for  the  amount 
promised. 

RULINO  LAW 

Story  Case  Answer 
If  one  person  makes  an  offer  without  contractual 
intention,  but  it  is  accepted  by  another  who  reasonably 
believes  that  an  offer  was  intended  in  a  legal  manner, 
a  contract  will  result.  The  law  will  not  permit  a  man 
to  say  one  thing  and  mean  another  as  against  a  per- 
son who  reasonably  relies  upon  the  statements  as  they 
were  uttered  and  had  no  knowledge  of  his  secret  in- 
tention.' In  the  Story  Case,  the  Pinkerton  Detective 
Agency  reasonably  believe  that  the  offer  of  the  Direct- 
ors was  real,  and  intended  for  a  serious  purpose. 
Thus,  when  it  performed  the  act  or  services  contem- 
plated, it  became  entitled  to  the  reward,  and  the  Di- 
rectors, having  misled  it,  cannot  say  now  that  they 
were  only  jesting.  Judgment  should  be  given  for  the 
Pinkerton  Agency. 


(6)     An  Invitation  to  Bid  Cannot  Be  Turned  Into  a 

Promise  by  an  Acceptance 

STOET  CASE 

S.  B.  Somerby  was  about  to  put  up  a  fireproof  bam 
of  the  latest  design  and  he  inserted  in  the  leading 


172  CONTEACTS 

architectural  magazines  that  bids  would  be  now  con- 
Bidered.  The  Portland  Cement  Company  sent  in  a 
bid  and  blue  prints,  w^hich  so  exactly  suited  Somerby 
that  he  mentioned  to  several  people  that  he  could  not 
have  been  better  satisfied.  This  bid  was  also  the  low- 
est received. 

Before  Somerby  wrote  to  the  cement  company  to 
begin  building,  he  decided  to  invest  in  some  Colorado 
land.  This  decision  delayed  his  first  plan.  The  com- 
pany insisted  that  he  allow  them  to  build  the  barn 
since  its  bid  was  the  lowest  and  since  the  specifications 
suited  him.  Somerby  refused  to  begin  the  work  and 
said  that  he  had  changed  his  mind  as  to  building.  The 
cement  company  began  suit  for  breach  of  contract. 
They  contended  that  a  contract  existed,  consisting  of 
an  offer  by  Somerby  through  the  magazines  and  an 
acceptance  on  their  part. 

Is  this  the  case? 

RXTLING  COURT  CASE  No.  1 

Spencer  vs.  Harding,  Law  Reports,  Volume  5  Com- 
mon Pleas,  Page  561. 

Harding,  by  an  agent,  issued  to  Spencer  and  other 
persons  engaged  in  the  wholesale  trade,  a  circular  let- 
ter which  read  as  follows : 

"We  are  instructed  to  offer  to  the  wholesale 
trade  for  sale  by  tender  the  stock  in  trade  of 
Messrs.  Eilback  &  Co.,  amounting  to  2503  pounds, 
and  which  will  be  sold  at  a  discount  in  one  lot, 
payment  to  be  made  in  cash,  at  12  o'clock  noon 
precisely ;  the  tenders  will  be  received  and  opened 
at  our  offices." 


CONTRACTS  173 

Spencer  made  a  tender  which  proved  to  be  the  high- 
est bid  for  the  stock  in  question.  But  it  was  rejected 
by  Harding  and  the  stock  in  trade  was  sold  to  another 
person.  Suit  was  then  brought  by  Spencer  to  recover 
damages.  He  claimed  that  this  circular  sent  out  by 
Harding  was  an  offer,  and  that  his  highest  bid  was 
an  acceptance. 

In  defense,  it  was  contended  by  Harding  that  the 
circular  was  only  an  advertisement ;  a  way  of  acquaint- 
ing the  public  with  the  fact  that  the  goods  were  for 
sale,  and  that  offers  from  the  public  would  be  enter- 
tained and  considered. 

Mr.  Justice  Willes  delivered  the  opinion  of  the 
court:  **If  the  circular  had  gone  on:  'We  undertake 
to  sell  to  the  highest  bidder',  the  reward  cases  would 
have  applied  and  there  would  have  been  a  good  con- 
tract. But  the  question  is,  whether  there  is  here  any 
offer,  or  whether  the  circular  amounted  to  anything 
more  than  a  mere  proclamation  that  Harding  is  ready 
to  chaffer  for  the  sale  of  the  goods,  and  to  receive  of- 
fers for  the  purchase  of  them.  Here,  there  is  a  total 
absence  of  any  w^ords  to  intimate  that  the  highest  bid- 
der is  to  be  the  purchaser.  It  is  a  mere  attempt  to  as- 
certain whether  an  offer  can  be  obtained  within  such 
a  margin  as  the  sellers  are  willing  to  adopt." 

The  court  decided  that  judgment  should  be  given  to 
Harding. 

RTJUNG  COURT  CASE  No.  2 

Anderson  vs.  The  Board  of  Directors,  Volume  122 
Missouri  Reports,  Page  61;  Volume  26  Lawyer's  Re- 
ports Annotated,  Page  707. 

Anderson  was  engaged  in  the  business  of  building; 
the  Board  of  Directors  was  a  corporation  having 


174  CONTRACTS 

charge  and  control  of  the  public  school  property  in  the 
City  of  St.  Louis.  They  had  a  well  known  rule  in  re- 
gard to  buildings,  by  which  it  was  provided  that  all 
new  buildings  should  be  ' '  let  by  contract  to  the  lowest 
and  best  bidder."  The  Board  of  Directors,  being  de- 
sirous of  erecting  a  new  high  school  building,  adver- 
tised for  bids.  The  advertisement  contained  the  pro- 
vision that  the  board  reserved  the  right  to  reject  any 
and  all  bids.  Anderson  made  a  bid  for  the  building. 
It  developed  that  his  bid  was  the  lowest  and  best  of 
all  the  bids  which  had  been  turned  in ;  but  the  contract 
was  not  given  to  him,  but  to  another.  Thereupon,  An- 
derson brought  this  action,  claiming  damages. 

It  was  contended  by  the  board  that  he  had  no  right 
to  sue  because  no  contract  had  ever  been  made  with 
him ;  this  advertisement  was  a  mere  invitation  to  those 
who  wished  to  bid;  their  bids  constituted  offers;  and 
they  were  free  to  choose  any  bid  they  saw  fit. 

Mr.  Justice  Barclay  said:  *'It  is,  indeed,  asserted 
that  the  Board  rejected  Anderson's  bid  without  cause, 
arbitrarily  and  capriciously,  through  favoritism  and 
bias.  But  if  the  board  had  the  absolute  right  to  re- 
ject any  and  all  bids,  no  cause  of  action  would  arise  to 
Anderson  because  of  the  motive  which  led  to  the  re- 
jection of  his  bid.  The  right  to  reject  was  uncondi- 
tional. The  board  was  entitled  to  exercise  that  right 
for  any  cause  it  might  have  deemed  necessary,  or  even 
without  any  assignable  cause.  That  advertisement 
was  not  an  offer  of  a  contract,  but  an  offer  to  reject 
proposals  for  a  contract." 

Judgment  was  given  for  the  Board  of  Directors  in 
accordance  with  the  opinion  of  the  Court. 


CONTRACTS  175 

EULINa  LAW 
Story  Case  Answer 

It  frequently  happens  that  a  person  will  make  a  pro- 
posal to  the  public  for  bids  or  offers.  Such  an  invita- 
tion to  bid  cannot  be  made  the  basis  of  a  contract.  In 
the  Court  Case  of  Spencer  vs.  Harding,  Harding  ad- 
vertised that  he  was  in  a  position  to  make  or  receive 
offers,  but  did  not  unconditionally  state  that  he  offered 
to  sell  anything ;  such  a  statement  is  not  an  offer,  and 
cannot  be  accepted  as  such.  Thus,  in  the  Story  Case, 
Somerby  did  not  make  an  offer  to  accept  the  lowest 
bid ;  he  merely  advertised  for  bids  to  be  made  to  him, 
which  he  might  accept  if  he  chose. 

Judgment  should  be  given  for  Somerby. 


(7)     Railroad  Time  Tables  Are  Subject  to  Acceptance 
STOBY  CASE 

The  Y.  L.  &  W.  Railroad  Company  announced  in 
its  recent  time  table  that  the  fare  from  Jonesboro  to 
Kellesburg  would  be  $5.78.  But  when  Adam  Board- 
man  went  to  purchase  his  ticket,  the  agent  refused  to 
sell  it  to  him  at  that  price.  Boardman  showed  the 
agent  the  quotation  from  the  time  table  and  insisted 
that  he  sell  the  ticket  for  the  announced  price.  The 
agent,  however,  refused  to  do  this  and  Boardman  was 
compelled  to  pay  the  additional  amount. 

As  soon  as  Boardman  could  consult  an  attorney,  he 
brought  suit  against  the  railroad  company  for  breach 
of  contract.  The  company  defended  on  the  ground 
that  the  price  stated  in  the  time  table  was  not  an  offer 
but  only  an  invitation  to  deal.    Is  this  true? 


176  CONTRACTS 

RULING  COURT  CASE 

Sears  vs.  The  Eastern  Railivay  Company,  Volume 
14  Allen's  Massachusetts  Reports,  Page  433;  Volume 
92  American  Decisions,  Page  780. 

The  Eastern  Railway  Company  was  a  common  car- 
rier of  passengers  between  certain  points  in  Massa- 
chusetts. It  published  a  daily  advertisement  in  the 
Boston  Daily  Advertiser,  Post,  and  Courier,  announc- 
ing that  a  train  would  leave  Boston  for  L^om  at  9 :30 
P.  M.  every  day  except  Wednesday  and  Saturday. 
Sears,  who  had  consulted  these  advertisements,  pur- 
chased a  package  of  five  tickets,  between  Boston  and 
Lynn,  which  were  good  for  any  trip  during  that  year. 
One  Friday,  Sears  went  to  Boston  on  a  forenoon  train ; 
when  he  returned  shortly  after  9 :30  to  the  station,  ex- 
pecting to  take  the  9:30  train,  he  was  informed  that 
it  had  been  postponed  for  that  night  until  11:15  to 
permit  certain  persons  to  attend  some  theater  in  Bos- 
ton. Sears  engaged  a  buggy  and  horse  and  drove  out 
to  Lynn.  He  brought  this  action  for  damages.  He 
contended  that  their  time  tables,  published  daily  in  the 
paper,  constituted  offers  that  the  trains  would  be  run 
in  that  manner.  By  buying  tickets,  he  had  accepted 
their  offer  before  it  had  been  revoked. 

The  railway  company  admitted  that  the  time  tables 
contained  offers  in  that  regard,  as  claimed  by  Sears, 
but  contended  that  they  had  withdrawn  the  offer  for 
that  particular  day,  because  they  had  spread  posters 
throughout  the  station  that  day,  that  the  train  would  be 
postponed  until  11:15  that  evening.  Sears  contended 
that  he  did  not  see  the  posters. 

Mr.  Justice  Chapman  said:  "If  this  action  can  be 
maintained,  it  must  be  for  the  breach  of  the  contract 


CONTRACTS  177 

with  the  company,  made  with  Sears.  He  had  purchased 
a  package  of  tickets,  entitling  liim  to  a  passage  in  their 
cars  from  Boston  to  Lynn.  This  constituted  a  con- 
tract between  the  parties.  The  principal  question  is, 
What  are  the  terms  of  the  contract  ?  The  ticket  does 
not  express  them  all.  The  time  tables  published  by 
the  company  and  relied  upon  by  the  public  in  accepting 
their  offers  constitutes  a  part  of  this  contract.^' 
These  time  tables,  however,  were  offers  which  could 
be  revoked  at  will  by  the  company  before  an  accept- 
ance had  been  made.  In  this  case,  they  were  not  re- 
voked, said  the  Court,  because  the  same  publicity 
should  have  been  given  to  the  revocation  as  to  the  pub- 
lication. They  were  published  daily  in  a  newspaper, 
but  were  revoked,  only  by  hand  bills. 

The  Court  held  that  the  railroad  company  was  liable 
for  the  damages  suffered  by  Sears  due  to  the  postpon- 
ing of  the  train. 

BUIJNG  LAW 

Story  Case  Answer 

"When  a  man  purchases  a  ticket  from  a  railroad  com- 
pany, he  thereby  makes  a  contract  with  the  company. 
But  the  ticket  itself  does  not  contain  all  the  terms  of 
the  contract.  The  time  tables,  and  schedule  showing 
rates  and  charges  also  constitute  a  part  of  the  offer  of 
the  company.  Wlien  a  person,  then,  purchases  a  ticket 
he  accepts  the  offer  of  the  railroad  company  to  carry 
him  safely,  in  accordance  with  its  published  time  tables 
and  rates.  These  time  tables  and  published  rates  are 
merely  offers,  however,  and  may  be  withdrawn  by  the 
railroad  at  any  time. 

But,  like  any  other  offer,  reasonable  publication  of 
their  withdrawal  must  be  made.    If  they  are  published 


178  CONTRACTS 

by  placards  in  the  station,  revocation  in  the  same  man- 
ner is  sufficient.  If  the  company  publishes  them  in  a 
newspaper,  it  is  generally  held  that  revocation  must 
be  made  in  the  same  manner.  In  the  Story  Case,  the 
company  had  published  certain  rates;  and  this  pub- 
lished rate  was  a  part  of  the  offer  made  to  the  public ; 
Boardman  tendered  money  for  a  ticket  and  thereby 
accepted  the  offer.  The  company  could  not  relieve 
itself  of  liability  on  such  a  contract  by  saying  that  it 
was  a  mere  invitation  to  bid.  Judgment  should  be 
given  for  Boardman. 

It  should  be  added  here  that  railroad  companies 
usually  protect  themselves  now  by  stipulation  in  the 
time  tables  governing  the  manner  of  withdrawal  of 
trains  and  changes  of  time. 


4.     Consideration  in  a  Contract 

A.    Consideration  Is  the  Moving  Force  of  a  Contract 

STORY  CASE 

Hilery  DeFort,  an  old  gentleman  who  was  closely 
allied  with  some  of  the  best  families  of  England, 
promised,  in  writing  and  in  the  presence  of  witnesses, 
that  he  would  give  his  nephew,  Geoffrey  DeFort, 
£10,000  when  Geoffrey  reached  the  age  of  twenty-one. 
He  (Hilery)  told  several  people  of  his  promise  and 
everyone  knew  that  the  old  gentleman's  promise  was 
to  be  relied  upon.  Hilery  DeFort  died  when  Geoffrey 
Was  past  twenty  but  not  yet  twenty-one.  On  his  death 
bed,  he  expressed  satisfaction  that  Geoffrey  was  pro- 
vided for  upon  his  twenty-first  birthday. 

Hilery  made  no  will  and  all  of  his  property  went  to 
his  son  and  heir.    The  heir  refused  to  pay  Geoffrey, 


CONTRACTS  179 

when  the  latter  reached  twenty-one,  and  Geoffrey  sued 
him  for  the  money.    He  defends  on  the  grounds  that 
Geoffrey  gave  no  consideration  for  Hilery's  promise. 
Which  party  should  win? 

EULING  COUET  CASE 

Louisa  Hamer  vs.  Franklin  Sidway,  Volume  V2A 
New  York  Reports,  Page  528. 

"William  E.  Story,  now  deceased,  during  his  lifetime 
agreed  with  his  nephew,  William  E.  Story,  that  if  the 
nephew  would  refrain  from  drinking  liquor,  using  to- 
bacco, swearing,  and  playing  cards  or  billiards  for 
money  until  he  should  become  twenty-one  years  of  age, 
that  he,  the  uncle,  would  give  to  him  $5,000  at  that 
time.  The  nephew  accepted  the  offer.  From  that  time 
until  he  reached  full  age  he  never  again  indulged  in 
any  of  the  habits  above  enumerated.  In  the  meantime, 
his  uncle  had  died.  His  personal  representative,  Frank 
Sidway  refused  to  pay  the  nephew  the  $5,000  and  this 
action  was  brought  to  recover  the  same. 

Sidway  contended  that  there  was  no  contract  be- 
tween the  nephew  and  the  uncle,  because  there  was  no 
consideration  for  the  agreement  of  the  uncle  to  make 
the  gift. 

Decision :  A  consideration  is  necessary  to  make  any 
agreement  legally  binding,  unless  the  agreement  is  un- 
der seal.  Without  a  consideration,  the  agreement  is 
without  force  or  effect.  It  may  be  morally  binding 
upon  the  promisor,  but  the  agreement  cannot  be  en- 
forced by  the  promisee  in  any  court.  But,  if  the 
promisee  relinquished  any  right,  or  does  anything, 
however  invaluable  to  him  or  to  the  promisor,  the  re- 
linquishment of  the  right,  or,  the  act,  will  constitute 


180  CONTRACTS 

a  good  consideration  for  the  promise  of  the  other. 
In  this  case,  the  nephew  gave  up  his  right  to  indulge 
in  certain  habits,  and  this  was  a  valuable  consideration, 
even  though  it  may  have  been  to  his  benefit,  and  con- 
ferred no  benefit  on  the  uncle. 

Accordingly,  it  was  decided  that  judgment  should  be 
given  for  Louisa  Hamer,  who  was  suing  for  the 
nephew. 

RULING  LAW 
Story  Case  Answer 

Every  simple  contract  presupposes  the  existence  of 
a  valuable  consideration.  In  general,  the  doing  of  any- 
thing by  one,  which  he  is  not  legally  bound  to  do,  or  the 
surrender  of  any  legal  right,  which  he  may  legally 
withhold,  constitutes  a  valuable  consideration.  Con- 
sideration is  the  moving  force  of  a  contract  and  that 
which  gives  it  life.  In  the  Story  Case,  there  was  no 
consideration  for  the  promise  of  Hilery  DeFort  to  pay 
his  nephew  the  sum  of  ten  thousand  pounds ;  therefore 
Geoffrey  can  recover  nothing  in  an  action  against  the 
heir  of  DeFort. 

B.     Every  Contract,  Not  Under  Seal,  Requires  a 
Consideration 
STORT  CASE 

Beyle  Brothers  sent  the  following  offer  to  Herdly 
&  Co.: 

**Jan.  3,  1915. 

Gentlemen:  We  offer  you  a  price  of  $1.02  for 
a  carload  of  wheat.  This  offer  to  remain  open  till 
noon  of  January  6th. 

Respectfully, 

(Signed)  Beyle  Beos." 


CONTEACTS  181 

Herdly  &  Co.  intended  to  accept  this  offer  on  the 
morning  of  January  6th,  but  on  that  morning  they  re- 
ceived the  following  telegram : 

"We  revoke  our  offer  of  the  3rd. 

(Signed)  Beyle  Beos.'* 

Herdly  &  Co.  admitted  that  they  did  not  accept  the 
offer  but  they  claim  that  they  would  have  accepted 
upon  receipt  of  the  offer  if  Beyle  Bros,  had  not  stated 
that  the  offer  would  remain  open  till  noon  of  the  6th. 
They  sued  Beyle  Bros,  for  breach  of  the  promise  to 
keep  the  offer  open  until  noon  of  the  6th. 

Beyle  Bros,  defend  on  the  ground  that  no  consider- 
ation was  given  for  the  promise  to  keep  the  offer  open, 
and,  therefore,  that  the  promise  was  not  binding.  What 
is  your  decision? 

EULING  COURT  CASE 

Bradley  vs.  Cook,  Volume  7  Connecticut  Reports, 
Page  57;  Volume  18  American  Decisions,  Page  78. 

Jonathan  Clark,  an  old  man,  was  in  indigent  cir- 
cumstances, and  unable  to  provide  for  himself.  Brad- 
ley, the  plaintiff  in  this  action,  furnished  him  neces- 
sities which  were  reasonably  worth  the  sum  of  sixty 
dollars.  When  Henry  Cook,  the  wealthy  and  only  son 
of  Jonathan,  was  informed  by  Bradley  of  what  had 
been  done,  he  signed  and  delivered  to  the  latter  a  writ- 
ing, in  which  he  acknowledged  the  debt  due  by  his 
father  to  Bradley  to  be  for  necessities,  and  promised 
to  pay  for  them,  provided  his  father  was  unable,  dur- 
ing his  lifetime.  Jonathan  died,  without  having  paid 
the  debt  or  any  part  thereof.  Then  this  action  was 
brought  by  Bradley  against  Henry  Cook  upon  his  writ- 


182  CONTRACTS 

ten  promise  to  pay  the  amount,  in  case  his  father 
did  not. 

Henry  Cook  insisted  that  his  promise  was  useless, 
so  far  as  its  binding  effect  at  law  was  concerned,  be- 
cause it  was  not  supported  by  a  consideration. 

Decision :  A  son  is  under  no  legal  duty  to  pay  debts 
previously  contracted  by  an  indigent  parent  for  the 
latter 's  necessary  support;  and  his  written  promise  to 
pay  such  debts  is  without  consideration.  Therefore,  it 
has  no  binding  effect  upon  the  son. 

Mr.  Justice  Doggett  said  in  part;  **The  contract  is 
not  a  specialty,  though  in  writing;  nor  is  it  governed 
by  the  law  merchant,  applicable  to  negotiable  paper. 
Were  it  of  the  first  description,  that  is,  a  sealed  in- 
strument, by  the  rules  of  the  common  law,  the  con- 
sideration would  be  locked  up  and  could  not  be  inquired 
into.  A  mere  written  contract  is  upon  the  footing  of 
a  parol  contract  and  a  consideration  must  be  proved. 
This  is  an  inflexible  rule  of  law,  and  the  Court  is  not 
at  liberty,  if  it  had  the  disposition,  to  subvert  it.'* 

Accordingly,  judgment  was  given  for  Henry  Cook, 
the  defendant  in  this  action. 

EULING  LAW 
Story  Case  Answer 

Every  contract,  not  under  seal,  must  be  supported 
by  a  consideration.  Unsealed  written  contracts  are  of 
the  same  class  as  oral  contracts.  They  must  be  sup- 
ported by  a  consideration,  or  they  are  not  legally  bind- 
ing. In  Bradley  vs.  Co  oh,  the  Court  Case,  there  was 
no  consideration  for  the  promise  of  Henry  Cook  to 
pay  for  necessities  furnished  his  father ;  at  least,  there 
was    no    present    consideration;    consequently,    his 


CONTEACTS  183 

promise  was  without  a  consideration  from  the  other 
party  and  is  not  enforcible  against  him.  In  the  Story- 
Case,  the  offer  of  Beyle  Brothers  to  sell  wheat,  and  the 
promise  to  keep  the  offer  open  for  three  days,  was 
without  consideration;  and  he  was  entitled  to  with- 
draw his  offer  at  any  time  before  acceptance.  Judg- 
ment would  therefore  be  given  for  Beyle  Brothers. 


C.     The  Adequacy  of  the  Consideration  Is  Not  Material 
STOET  CASE 

John  Waters  found  a  stone  he  thought  might  be  of 
some  value,  although  he  neglected  to  ascertain  its  exact 
worth.  He  went  to  Islam  &  Abraham,  dealers  in  pre- 
cious stones,  and  offered  the  stone  to  them  for  $100; 
Islam  &  Abraham  refused  to  buy  it  until  all  efforts  had 
been  made  to  find  the  person  who  had  lost  it.  Adver- 
tisements were  inserted  in  all  the  newspapers,  and 
after  a  year  had  gone  by.  Waters  repeated  the  offer. 

Isham  &  Abraham  knew  that  the  stone  was  a  dia- 
mond of  great  worth,  probably  about  $10,000,  but  since 
Waters  had  not  asked  them  the  value,  they  did  not  in- 
form him.    They  accepted  the  offer. 

As  Waters  returned  to  get  the  stone,  he  met  a  friend 
who  wanted  to  see  it.  Then  Waters  learned  that  the 
stone  was  a  diamond  worth  a  hundred  times  what  he 
had  offered  it  for.  He  refused  to  sell  it  to  Islam  & 
Abraham,  alleging  that  the  consideration  was  so  small 
in  comparison  with  the  true  value  of  the  stone,  that  he 
could  not  be  held  to  his  bargain.  Islam  &  Abraham 
sued  him  for  the  stone  and  for  breach  of  his  promise 
to  sell  it  to  them. 

Who  should  have  won  I 


184  CONTEACTS 

RULING  COUET  CASE 

JoTin  B.  Nell  vs.  Zucharias  Schnell,  Volume  17  Indi- 
ana Reports,  Page  29. 

Theresa  Schnell,  the  deceased  wife  of  the  defendant, 
Zacharias  Schnell,  before  her  death,  made  a  will  in 
which  she  attempted  to  leave  property  to  John  B. 
Nell,  among  others.  But  all  her  property  had  become 
that  of  her  husband  upon  their  marriage,  so  that,  by 
will,  Nell  and  the  others  received  nothing.  Zacharias 
Schnell  was  a  just  man  and  wished  to  see  that  these 
persons  should  be  taken  care  of.  So,  by  instrument 
in  writing,  Zacharias  Schnell  agreed  to  give  John  B. 
Nell  the  sum  of  $200,  in  consideration  of  love  and  af- 
fection and  one  cent  by  John  B.  Nell  paid  to  Zacharias 
Schnell.  This  agreement  was  signed  by  both  parties. 
Thereafter,  however,  Zacnarias  Schnell  changed  his 
mind,  and  refused  to  pay  the  sum  promised.  John  B. 
Nell  brought  this  action  to  recover  the  $200. 

The  defense  of  Schnell  was  that  his  promise  was  not 
legally  binding,  because  it  was  unsupported  by  a  val- 
uable consideration. 

Decision:  The  general  rule  is  that  any  considera- 
tion, however  inadequate,  is  sufficient  to  make  binding 
an  agreement  otherwise  binding.  It  is  not  at  all  nec- 
essary that  the  consideration  should  be  of  the  same 
value  as  that  which  moves  from  the  other  party.  But 
it  is  said  that  where  money  is  exchanged,  that  a  less 
sum  can  never  be  a  consideration  for  a  larger  sum. 

Mr.  Justice  Perkins,  who  delivered  the  opinion  of  the 
Court,  said:  *'The  consiaeration  of  one  cent  will  not 
support  the  promise  of  Schnell.  It  is  true,  that  as  a 
general  rule,  inadequacy  of  consideration  will  not  viti- 
ate an  agreement.    But  this  doctrine  does  not  apply 


CONTEACTS  185 

to  a  mere  exchange  of  sums  of  money,  of  coins,  whose 
value  is  definitely  fixed,  but  to  the  exchange  of  some- 
thing of,  in  itself,  indeterminate  value,  for  money,  or, 
perhaps,  for  some  other  thing  of  indeterminate  value. 
In  this  case,  had  '':he  one  cent  mentioned  been  some 
particular  one  cent,  a  family  piece,  or  ancient,  remark- 
able coin,  possessing  an  indeterminate  value,  extrinsic 
from  its  simple  money  value,  a  different  view  might  be 
taken. '* 

Judgment  was,  therefore,  given  for  Schnell  in  this 
action. 

BXTLDTG  LAW 
Story  Case  Answer 

The  law  does  not  require  that  consideration  shall 
be  adequate.  If  it  is  shown  that  there  is  a  considera- 
tion, the  law  goes  no  further  as  a  general  rule.  It  as- 
sumes that  the  parties  know  better  than  any  one  else 
what  they  want ;  and  if  they  get  what  they  want,  it  is 
beyond  the  business  of  the  court  to  make  their  con- 
tracts for  them.  But  where  it  appears  that  the  agree 
ment  is  mere  exchange  of  money,  the  law  does  require 
that  the  consideration  shall  be  adequate.  In  the  Couil 
Case  of  Schnell  vs.  Nell,  the  Court  was  of  the  opinion 
that  one  cent  could  not  be  a  consideration  for  $200. 
Had  the  one  cent  been  a  unique  coin,  or  a  family  piece, 
the  Court  would  not,  then,  have  inquired  into  its  value 
as  a  consideration.  But  given  as  a  piece  of  money  in 
exchange  for  a  much  larger  sum,  according  to  the 
Court,  certainly  was  not  a  consideration.  In  the  Story 
Case,  assuming  that  Islam  and  Abraham  were  not  in 
any  way  fraudulent,  the  inadequacy  of  the  considera- 
tion is  not  material.  Islam  and  Abraham  may  recover 
damages  from  Waters  for  liis  failure  to  sell  the  stone. 


186  CONTRACTS 

D.    Consideration  Need  Not  Be  in  Money  or  Money  Value 

STOEY  CASE 

Farry  Shoen  wanted  his  nephew,  who  was  attending 
college,  to  refrain  from  playing  football  and  made  him 
the  following  offer: 

"Oct.  1,  1914. 
If  my  nephew,  Kermit  Shoen,  will  promise  to 
refrain  from  playing  football  I  will  defray  his  ex- 
penses to  the  San  Francisco  "World's  Fair  in  1915. 

(Signed)  Farry  Shoen." 

Kermit  refrained  from  playing  football  in  accord- 
ance with  his  promise.  On  January  1,  Kermit  in- 
herited a  large  fortune,  and  his  uncle  refused  to  pay 
the  expense  of  the  World's  Fair  trip  on  the  ground 
that  the  contract  was  void  for  lack  of  consideration. 
The  nephew  brought  suit  to  recover  damages  for 
breach  of  contract.    Can  he  recover? 

EXTUNG  COUET  CASE  No.  1 

Talbott  vs.  Stemmons,  Volume  89  Kentucky  Reports, 
Page  222;  Volume  25  American  State  Reports,  Page 
531. 

Mrs.  Sallie  D.  Stemmons  was  the  step-grandmother 
of  Albert  Talbott,  who  is  the  plaintiff  in  this  action. 
Albert  was  addicted  to  the  smoking  habit.  This  habit 
troubled  his  grandmother  very  much,  and  after  several 
fruitless  attempts  to  persuade  him  to  abandon  it,  she 
made  the  following  written  agreement  with  him : 

**  April  26,  1880. 
I  do  promise  and  bind  myself  to  give  my  grand- 
son, Albert  Talbott,  five  hundred  dollars  at  my 
death,  if  he  will  never  take  another  chew  of  to- 


CONTRACTS  187 

bacco,  or  smoke  another  cigar  during  my  life,  from 
this  date  up  to  my  death;  and  if  he  breaks  this 
pledge,  he  is  to  refmid  double  the  amount  to  his 
mother. 

Albert  Talbott, 
Satjje  D.  Stemmons." 

Albert  refrained  from  the  use  of  tobacco  in  any  form 
during  the  life  of  his  grandmother ;  and  after  her  death 
demanded  the  five  hundred  dollars  from  her  represen- 
tative; the  latter  refused  to  pay  the  money.  There- 
upon, Albert  brought  this  action  to  recover  the  amount. 

It  was  contended  by  Stenomons,  the  defendant,  that 
the  promise  of  the  grandmother  never  became  legally 
binding,  because  it  was  not  supported  by  a  valuable 
consideration. 

Decision :  It  is  not  necessary  that  the  consideration 
of  a  contract  shall  be  money;  nor  is  it  necessary  that 
the  consideration  shall  be  such  that  it  may  be  meas- 
ured in"  money's  worth.  Any  right,  relinquished  by  the 
promisee,  constitutes  a  valuable  consideration,  whether 
it  was  beneficial  to  him  or  not,  and  it  makes  binding 
the  promise  of  his  grandmother,  made  before  her 
death. 

Mr.  Justice  Pryor  said  in  part ;  "The  right  to  enjoy 
the  use  of  tobacco  was  a  right  that  belonged  to  the 
grandson,  and  not  forbidden  by  law.  The  abandon- 
ment of  its  use  may  have  saved  him  money  or  con- 
tributed to  his  health;  nevertheless,  the  surrender  of 
that  right  caused  the  promise,  and  having  the  right  to 
contract  with  reference  to  the  subject  matter,  the 
abandonment  of  the  use  was  a  sufficient  consideration 
to  uphold  the  promise  of  grandmother." 


188  CONTRACTS 

Therefore,  judgment  was  given  for  Albert  Talbott 
in  this  action. 

EUMNG  COURT  CASE  No.  2 

JoJin  Devecmon  vs.  Alexander  Shaw,  Volume  69 
Maryland  Beports,  Page  199;  Volume  9  American 
State  Reports,  Page  422. 

John  Devecmon,  a  nephew  of  John  Combs,  deceased, 
had  lived  with  his  uncle,  and  worked  for  him  as  a  clerk 
in  his  business.  In  the  early  part  of  the  year  1878,  the 
xmcle,  who  was  very  fond  of  the  boy,  offered  to  pay 
all  the  expenses  if  the  nephew  would  take  a  trip 
through  Europe.  The  trip  was  purely  recreational, 
and  had  no  connection  whatsoever  with  the  business  of 
the  uncle.  The  nephew,  relying  upon  the  promise  that 
he  should  be  reimbursed  for  the  expenses  incurred 
while  abroad,  made  ready  and  started  on  the  journey. 
While  abroad,  his  uncle  died.  When  he  returned,  he 
demanded  of  Shaw,  the  personal  representative  of  his 
uncle,  money  sufficient  to  cover  his  expenses  incurred 
while  abroad,  in  accordance  with  the  promise  of  his 
uncle.  The  request  was  denied  by  Shaw.  Thereupon, 
John  Devecmon  brought  this  action  to  recover  the 
same. 

It  was  insisted  by  Shaw  that  the  promise  of  the  uncle 
was  not  binding,  because  there  was  no  consideration; 
the  travels  of  the  nephew  were  not  necessarily  a  detri- 
ment to  him ;  very  likely  they  were  an  advantage ;  and 
certainly,  insisted  Shaw,  the  trip  conferred  no  benefit 
upon  the  uncle. 

Decision :  Any  act  performed  by  one  person,  wheth- 
er or  not  it  is  detrimental  to  him,  will  constitute  a  val- 
uable consideration  for  the  promise  of  another,  pro- 
vided it  was  the  right  of  the  person  to  perform  or  with- 


CONTRACTS  189 

hold  the  performance  of  the  act,  as  he  chose.  In  this 
case,  the  nephew  was  under  no  obligation  to  go  to 
Europe,  although  the  trip  very  likely  benefited  him. 
Nevertheless,  the  act  constitutes  a  valuable  considera- 
tion for  the  promise  of  the  uncle.  Therefore,  that 
promise  is  legally  binding,  and  the  nephew  is  entitled 
to  recover  from  Shaw,  money  sufficient  to  cover  his  ex- 
penses incurred  in  making  the  trip. 

Accordingly,  judgment  was  given  for  John  Devec- 
mon  in  this  action. 

RULING  LAW 
Story  Case  Answer 

The  law  does  not  designate  the  kind  of  consideration 
which  is  necessary.  It  is  evident,  therefore,  that  the 
consideration  need  not  be  in  money,  nor  need  it  be 
something  wliich  may  be  measured  in  terms  of  money. 
The  doing  of  any  act,  which  the  doer  is  not  legally 
bound  to  do,  or  the  refraining  from  doing  of  any  act, 
which  the  doer  might  legally  do,  constitutes  a  consid- 
eration sufficient  to  create  a  legally  binding  contract. 
This  is  well  illustrated  by  the  Court  Case  of  Talhott 
vs.  Stemmons;  there,  the  grandson  was  under  no  legal 
duty  to  refrain  from  using  tobacco,  even  though  its 
discontinuance  might,  as  a  matter  of  fact,  confer  a 
benefit  upon  him ;  he  was  entitled  to  use  tobacco  if  he 
desired,  and  his  abstinence  was  a  sufficient  considera- 
tion to  make  binding  the  promise  of  his  grandmother 
to  pay  him  $500.  The  same  thing  is  true  in  the 
Story  Case — Kermit  was  under  no  legal  obligation  to 
refrain  from  playing  football.  In  fact,  his  sacrifice 
of  the  game  may  have  been  beneficial  to  him.  But  his 
promise  to  refrain,  was  a  sufficient  consideration  to 
make  binding  the  agreement  of  his  uncle  to  pay  the 


190  CONTRACTS 

expense  of  the  World's  Fair  trip  and  the  nephew  is 
entitled  to  recover. 

E.     Consideration  May  Take  One  of  the  Following  Forms : 
(1)    In  a  Bi-lateral  Contract  It  Is  a  Promise  for  a  Promise 

STOBY  CASE 

Welton,  Baker  &  Company,  wholesale  coal  dealers, 
wrote  the  following  letter  to  The  Cherry  Red  Brick 
Company : 

**  January  2,  1915. 
Gentlemen : 

We  offer  yon  steam  Imnp  coal  at  $3  per  ton, 
if  yon  agree  to  bny  all  the  coal  you  may  need  from 
us  for  this  year. 

(Signed)  Welton,  Bakee  &  Company." 

On  January  3,  1915,  The  Cherry  Red  Brick  Com- 
pany replied  with  the  following  letter : 
*  *  Gentlemen : 

We  accept  your  offer  of  the  2nd  to  furnish  ns 
all  the  steam  lump  coal  we  may  need  for  this  year 
at  $3  per  ton. 

(Signed)  The  Chebry  Red  Brick  Company.*' 

Several  orders  were  filled  in  accordance  with  this 
nnderstanding.  On  April  1,  1915,  a  national  miners' 
strike  was  called  and  the  market  price  of  all  coal  in- 
creased. Welton,  Baker  &  Company  wrote  The  Cherry 
Red  Brick  Company  the  following  letter : 
**  Gentlemen: 

Upon  advice  from  our  attorneys,  we  have  elected 
to  cancel  our  arrangement  with  you  on  the  ground 
that  a  binding  contract  never  existed  between  ns. 
We  made  you  an  offer  which  remained  merely  a 
standing  offer  subject  to  our  withdrawal  at  any 


CONTEACTS  191 

time,  since  it  was  not  supported  by  a  promise  from 
you,  changing  it  into  a  binding  contract.  In  other 
words,  since  you  merely  promised  to  buy  all  the 
coal  you  might  need — and  you  might  not  need 
any — ^we  could  not  hold  you  to  buy  any,  and  for 
that  reason  you  cannot  hold  us  now. 

(Signed)  Welton,  Bakeb  &  Company." 

The  Cherry  Bed  Brick  Company  started  suit  upon 
the  alleged  contract.  Is  the  defense  of  the  coal  com- 
pany effective  ? 

EULINa  COUET  CASE 

Worthy  vs.  Rice,  Volume  8  Richardson  Reports 
(South  Carolina),  Page  416. 

Rice  was  a  cotton  planter  and  had  many  slaves  on 
his  plantation.  After  his  cotton  was  all  picked  by  the 
slaves,  he  was  desirous  of  hiring  them  out,  so  that  they 
would  earn  revenue  for  him.  Worthy  was  engaged  in 
carrying  cotton  up  and  down  the  river  in  boats  for 
planters.  Just  before  all  the  produce  was  ready  for 
market.  Rice  agreed  with  Worthy  to  ship  aU  his  cotton 
with  him,  if  he  would  promise  to  hire  two  slaves  from 
the  Rice  plantation  as  boat  hands.  Worthy,  eager  to 
get  as  much  cotton  to  carry  as  possible,  promised  to 
engage  the  men.  A  few  days  later,  Rice  sold  all  his 
cotton,  without  acquainting  Worthy  of  his  intention. 
When  the  latter  learned  that  Rice  had  no  cotton  re- 
maining, he  brought  this  action  to  recover  damages 
for  the  breach  of  the  contract. 

It  was  insisted  by  Rice  that  he  was  not  liable,  be- 
cause there  was  no  consideration  for  his  promise. 

'  Decision :  The  promise  of  the  parties  in  this  case 
was  mutual  and  simultaneous;  each  was  the  induce- 
ment for  the  other.  An  agreement,  consisting  of  mutual 


192  CONTRACTS 

promises,  is  legally  binding,  because  the  promise  of 
each  is  a  consideration  for  the  promise  of  the  other. 
Thus,  Worthy  is  entitled  to  recover  from  Rice  such 
damages  as  he  suffered  by  the  loss  of  the  carrying 
privilege. 

Therefore,  judgment  was  for  "Worthy,  the  plaintiff, 
in  this  action. 

RULING  LAW 
Story  Case  Answer 

Where  two  parties  make  mutual  and  simultaneous 
promises  to  each  other,  a  bi-lateral  relationship  exists, 
so-called  because  each  party  is  under  obligation  to  the 
other  to  the  extent  of  his  promise.  Here,  the  consider- 
ation does  not  consist  of  the  doing  of  any  act  by  either 
party,  but  consists  in  the  promise  of  each. 

In  the  Story  Case,  a  good  contract  existed,  consist- 
ing of  the  promises  of  both  sides.  Apparently,  the 
reasoning  of  the  coal  company,  upon  which  it  bases 
the  conclusion  that  a  contract  does  not  exist,  is  correct 
because,  as  stated,  the  brick  company  might  not  need 
any  coal.  Yet,  it  has  agreed  to  buy  all  the  coal  it  might 
need  from  the  Welton,  Baker  Company,  and  therefore, 
has  obligated  itself  not  to  buy  any  coal  elsewhere.  This 
is  a  sufficient  promise  to  support  a  counter-promise 
and  the  contract  is  good. 


(2)     In  Unilateral  Contracts,  It  Is  the  Act  of  One  Party 

for  the  Promise  of  the  Other 

STORY  CASE 

Frank  Johnson  said  to  Eph  Kilkot:    **I'll  give  you 
five  dollars  when  you  dig  the  two  post  holes  for  the 


CONTRACTS  193 

new  gate  I  *m  putting  np. ' '  Eph  responded,  *  *  All  right, 
I  will  dig  them. ' ' 

The  next  day  Johnson  hired  another  man  to  dig  the 
holes  and  Kilkot  found  the  work  already  finished  when 
he  brought  his  tools;  he  sued  Johnson  for  breach  of 
promise.  Johnson  defended  on  the  ground  that  his  of- 
fer contemplated  an  act,  that  is,  digging  the  post  holes, 
as  acceptance;  and  that  he  made  no  promise  that  he 
would  allow  Kilkot  to  dig  the  holes. 

Is  this  defense  good? 

EXTUNG  00X7BT  CASE 

Barnes  vs.  Ferine,  Volume  9  Barhour  Reports  (New 
York),  Page  202. 

Barnes,  as  trustee  of  the  First  Presbyterian  Church, 
brought  this  action  against  Ferine  on  a  subscription 
paper,  which  was  in  the  following  words : 

**We,  the  subscribers  hereto,  agree  to  pay  the 
sums  set  opposite  our  respective  names,  for  the 
purpose  of  building  a  Presbyterian  Church." 

Perine  subscribed  $150.  The  church  was  erected 
with  the  knowledge  and  approval  of  Perine.  When  it 
had  been  completed  anri  Perine  was  requested  to  pay 
the  amount  which  he  had  promised,  he  refused  to  settle. 
Thereupon,  this  action  was  instituted  against  him  for 
the  recovery  of  the  $150. 

He  defended  that  his  promise  to  pay  the  $150  was 
without  consideration;  that  the  church  did  not  accept 
his  offer  by  a  promise ;  and  that  the  authorities  of  the 
church  were  never  bound  under  any  obligation  to  build. 

Decision :  In  this  case,  when  Perine  made  his  prom- 
ise, it  might  have  been  without  consideration  in  that 


194  CONTRACTS 

the  church  authorities  were  under  no  obligation  to  pro- 
ceed with  the  erection  of  the  church.  His  promise  to 
pay,  however,  contemplated  that  it  might  be  accepted 
by  an  act  on  the  part  of  the  authorities ;  that  is,  the  act 
of  building  the  church.  This  was  done,  and  the  erec- 
tion is  now  a  valuable  consideration  for,  and  makes 
binding  the  promise  of  Ferine. 

Mr.  Justice  Paige  said  in  part :  *  *  It  is  not  necessary 
that  a  consideration  should  exist  at  the  time  a  promise 
is  made.  Thus,  if  A  promise  B  to  pay  him  a  sum  of 
money  if  he  will  do  a  particular  thing  or  act,  and  B 
does  the  act  before  the  revocation  of  the  promise,  the 
promise  thereupon  becomes  binding,  although  B  does 
not  at  the  time  of  the  promise  engage  to  do  the  act. 
Intermediate  between  the  promise  and  the  perform- 
ance of  the  act,  the  obligation  of  the  promise  is  sus- 
pended.'* 

Judgment  was,  therefore,  given  for  Barnes. 

BXTLINa  LAW 
Story  Case  Answer 

If  one  party  promises  to  pay  another  a  certain 
sum,  provided  that  the  other  will  do  a  certain  act, 
until  that  act  is  done  there  is  no  contract.  When  the 
act  is  done,  a  unilateral  contract  exists,  that  is,  one 
in  which  only  one  person  is  under  obligation,  the  per- 
son who  made  the  offer.  The  consideration  consists 
of  two  parts,  one  a  promise,  the  other  an  act. 

In  the  Story  Case,  the  promise  of  Johnson  contem- 
plated that  it  should  be  accepted  by  an  act  by  Kilkot ; 
until  that  act  was  performed,  the  promise  of  Johnson 
was  without  consideration,  and  he  had  the  right  to 
withdraw  it  at  any  time  he  chose.  Therefore,  after 
his  withdrawal,  he  is  not  liable  to  Kilkot. 


CONTRACTS  195 

F.    There  May  Be  a  Good  Consideration 

(1)     In  a  Compromise 

STOEY  CASE 

The  Buckeye  Laundry  Company  had  an  agent  in  the 
town  of  Jefferson  who  transacted  a  large  amount  of 
business  for  them.  Several  hundred  dollars  were 
often  in  his  possession  each  month  and  his  wages  were 
deducted  from  this  monthly  account. 

In  May,  1914,  the  agent,  William  Dutcher,  sent  in 
a  check  to  the  laundry  for  $175.85  *'in  full  payment." 
The  laundry  refused  to  receive  the  check  in  full  pay- 
ment, claiming  the  balance  due  was  $201.  There 
was  some  correspondence  between  the  laundry  and 
Dutcher  and,  finally,  the  parties  agreed  to  compromise 
the  controversy  at  the  sum  of  $190.  After  this  com- 
promise had  been  agreed  upon,  Dutcher  found  receipts 
which  would  have  proven  that  the  amount  due  was 
really  $175.85.  Whereupon,  he  refused  to  pay  the 
laundry  $190. 

The  laundry  sued  him  for  $190.  He  defended 
on  the  grounds  that  the  real  balance  due  was  $175.85. 
Is  this  defense  valid? 

BUUNG  COUBT  CASE 

Russell  vs.  Coah,  Volume  3  Hill  Reports  (New. 
York),  Page  504^ 

Cook  was  the  owner  of  a  canal  boat,  and  with  it  was 
engaged  in  carrying  freight  for  hire  between  certain 
points.  Palmer  had  shipped  some  barley  in  this  boat 
from  his  store  in  Onondago  County  to  a  man  living  in 
Albany.  While  making  this  trip,  the  boat  of  Cook  col- 
lided with  another  boat,  and  went  down,  losing  all  its 
cargo.    Since  it  was  a  doubtful  question  whether  the 


196  CONTRACTS 

collision  was  caused  by  negligence  of  Cook,  or  by  the 
negligenoe  of  the  other  boat,  a  controversy  occurred 
between  Cook  and  Palmer  as  to  whether  Cook  should 
stand  the  whole  loss.  But  it  was  finally  settled  that 
Palmer  would  agree  to  release  half  his  claim,  if  Cook 
would  agree  to  pay  the  other  half.  In  accordance  with 
this  agreement.  Cook  gave  a  note  to  Palmer,  or  order, 
in  the  sum  of  $6,834.  The  note  fell  due  on  July  1, 1837, 
but  was  not  paid  at  that  time.  Palmer  then  trans- 
ferred the  note  to  Eussell,  who  brought  this  action 
on  it 

The  defense  of  Cook  was  that  the  note  was  not  bind- 
ing, because  it  was  not  supported  by  a  consideration. 

Decision:  Between  Cook  and  Palmer  there  was  a 
bona  fide  controversy  as  to  whether  Cook  was  liable  for 
the  whole  loss.  Palmer,  instead  of  using  his  legal  right 
to  sue  for  it,  agreed  to  release  his  claim  for  the  full 
loss  in  consideration  of  a  promise  on  the  part  of  Cook 
to  pay  half.  The  release  of  his  right  to  sue  for  the 
whole  claim  was  a  thing  which  he  was  under  no  legal 
duty  to  do.  Thus,  it  was  a  valuable  consideration,  suf- 
ficient to  support  the  promise  of  Cook  to  pay  half  the 
claim.  Therefore,  Palmer,  and  his  assignee,  Russell, 
are  entitled  to  recover  the  amount  promised. 

Therefore  judgment  was  given  for  Russell,  the  plain- 
tiff in  this  action. 

RULING  LAW 
Story  Case  Answer 

It  is  a  legal  right  of  every  person  to  sue  when  he 
believes  that  he  has  a  claim  against  another,  even 
though  it  may  seem  that  his  belief  in  the  claim  is  un- 
reasonable or  ungrounded.  If,  therefore,  the  person 
against  whom  he  believes  he  has  this  right  agrees  to 


CONTRACTS  197 

pay  a  certain  sum,  even  though  it  may  be  more  than 
the  sum  actually  due  as  showTi  later,  in  consideration 
that  the  claimant  will  forbear  to  sue,  his  agreement  or 
promise  not  to  insist  upon  this  right  will  constitute  a 
good  consideration  for  the  promise  of  the  other  to  pay 
a  higher  sum  than  is  actually  due.  This  is  called  a 
compromise ;  the  compromise  of  one  not  to  sue  on  the 
doubtful  claim  is  a  consideration  for  the  promise  of  the 
other  to  pay  a  higher  sum  even  than  is  actually  due. 
The  claimant  must  act  in  good  faith;  and  he  must  in 
honor  believe  that  he  has  such  a  claim  to  the  extent 
that  he  demands,  or  his  promise  to  forbear  is  not  a 
consideration.  In  the  Story  Case,  the  promise  of  the 
laundry  company  not  to  sue  for  $201  was  a  good 
consideration  for  the  promise  of  Dutcher  to  pay  $190, 
even  though  it  was  thereafter  shoA\Ti  that  the  sum  act- 
ually due  was  only  $175.85.  The  laundry  company  may 
recover  the  $190. 


(2)     In  a  Composition  With  Creditors 

STOEY  CASE 

The  Middlesex  Grocery  Company  was  financially 
embarrassed,  and  there  was  a  possibility  that  the  firm 
would  be  compelled  to  go  into  bankruptcy.  To  prevent 
this,  the  creditors  assembled  and  agreed  to  take  in 
payment  of  their  claims  90  cents  on  the  dollar.  Later, 
Levy  &  Co.,  who  were  among  these  creditors,  decided 
to  sue  for  their  entire  claim,  instead  of  taking  90  cents 
on  the  dollar.  They  brought  suit  against  The  Middle- 
sex Grocery  Company  for  $1,000,  the  balance  due  to 
them. 

The  Middlesex  Company  defended  on  the  ground 
that  Levy  &  Co.  had  agreed  to  take  90  cents  on  the  dol- 


198  CONTEACTS 

lar  and  hence,  that  the  claim  was  only  $900.  Levy  &  Co. 
answered  this  defense,  by  saying  that  the  promise  to 
take  $900  was  not  supported  by  any  consideration.  To 
this,  the  Middlesex  Co.  replied  that  the  promise  of  each 
creditor  was  consideration  for  the  promise  of  every 
other  creditor. 
What  is  your  decision? 

BXTUNG  OOUET  CASE 

Langston  vs.  Stewart  Brothers,  Volume  103  Georgia 
Reports,  Page  290. 

Stewart  Brothers  were  partners  conducting  a  retail 
grocery  store.  The  firm  owed  Langston  $158  for  goods 
delivered,  upon  an  open  account.  In  1895,  Stewart 
Brothers  became  involved  financially  and  could  not 
satisfy  their  obligations.  The  firm's  creditors,  there- 
upon agreed  among  themselves  with  Stewart  Brothers 
to  accept  fifty  per  cent  of  their  claims  in  full  settlement 
of  all  obligations.  Under  such  an  arrangement  entered 
into  with  all  the  creditors,  Stewart  Brothers  were  able 
to  secure  money  to  pay  the  debts  in  this  proportion. 
Langston  became  a  party  to  this  written  contract. 

When  the  money  was  tendered  to  Langston  under 
this  contract,  he  refused  to  accept,  insisting  that  the 
contract  was  without  consideration.  Thereupon,  he 
started  this  suit  for  the  full  amount.  Stewart  Brothers 
entered  the  composition  contract  as  a  defense. 

Justice  Lewis  gave  the  opinion  of  the  Court;  "It  is 
well  established  that  a  contract  is  binding  when  it 
forms  a  part  of  a  composition  in  which  several  credit- 
ors join,  mutually  agreeing,  on  account  of  the  embar- 
rassed or  insolvent  condition  of  their  common  debtor, 
to  forbear  pressing  their  claims  to  the  full  amount. 


CONTRACTS  199 

The  new  consideration  which  enters  into  and  supports 
such  an  agreement  is  the  undertaking  of  the  other 
creditors  to  give  up  a  portion  of  their  demands.  To 
allow  a  creditor,  who  has  entered  into  such  an  agree- 
ment, upon  which  all  the  others  had  acted,  to  repudi- 
ate his  contract  and  sue  for  the  entire  amount  of  his 
original  debt,  would  be  sanctioning  the  perpetration  of 
a  fraud." 

Judgment  is  given  for  Charles  D.  and  John  L. 
Stewart. 

BTTLINa  LAW 
Story  Case  Answer 

A  composition  with  creditors  rests  upon  an  intrinsic 
consideration,  namely,  the  mutual  agreement  of  the 
creditors  to  forego  their  legal  rights  and  to  accept 
what  is  offered  for  their  common  benefit.  The  promise 
of  each  creditor  is  the  consideration  for  that  of  the 
others.  Each  creditor  enters  into  a  new  agreement 
with  the-  debtor,  the  consideration  of  which  is  the  for- 
bearance of  all  the  other  creditors  who  became  parties 
to  the  composition  to  insist  upon  their  claims  in  fulL 
In  the  Story  Case,  the  defense  of  the  Middlesex  Gro- 
cery Company  is  effective. 


(3)     In  the  Force  of  a  Previous  Request 

STORY  CASE 

Phillips  Ward  and  Thomas  Byron,  a  painter,  had 
some  negotiations  regarding  the  painting  of  Ward's 
fence.  Before  terms  were  agreed  upon,  Byron  was 
certain  that  he  could  please  Ward.  He  brought  his 
paint  and  brushes  and  started  work.   When  Ward  was 


200  CONTEACTS 

leaving  his  honse,  he  saw  Byron  and  said,  **Well,  that 
is  a  pretty  red  you  are  using. ' ' 

After  working  for  a  week,  Byron  completed  the  task 
and  demanded  pay  for  his  work.  Ward  refused  to  pay, 
on  the  ground  that  a  contract  never  existed.  Is  this 
correct? 

BTTUNa  COTTBT  CASE 

Hiclcs  vs.  Burhans,  Volume  10  Johnson  Reports 
(New  York),  Page  213. 

Certain  persons  had  swindled  Burhans  and  others, 
and  then  had  fled.  Hicks,  although  it  was  not  his  of- 
ficial duty,  began  a  pursuit  of  the  fugitives.  Burhans 
and  others,  who  were  the  victims,  assembled  and  signed 
a  certain  paper,  reciting  that,  since  Hicks,  previous  to 
the  making  of  the  paper,  had  incurred  large  expenses 
in  pursuit  of  the  swindlers,  that  they  promised  to  pay 
Hicks  all  the  expenses  he  had,  and  might  thereafter  in- 
cur in  this  pursuit.  Thereafter,  Hicks  drew  up  his 
account,  amounting  to  $138.  Burhans  and  the 
others,  when  shown  this  account,  made  no  objection  to 
it.  But  when  it  was  presented  to  them  for  payment, 
they  refused  to  settle.  Thereupon,  Hicks  brought  this 
action  against  Burhans  for  his  share  of  the  amount. 

The  defense  of  Burhans  consisted  in  the  fact  that 
there  was  no  present  consideration  for  the  services 
which  Hicks  had  performed;  that  he  had  performed 
the  services  before  they  expressly  promised  to  pay 
therefor. 

By  the  Court:  "The  written  promise  to  pay,  if 
founded  on  a  past  consideration,  may  be  good,  if  the 
past  services  be  laid  to  have  been  done  upon  request; 
and  if  not  so  laid,  a  request  may  be  implied  from  the 


CONTRACTS  201 

beneficial  nature  of  the  consideration,  and  the  circum- 
stances of  the  transaction." 

Because  of  the  beneficial  nature  of  the  services,  the 
court  was  of  opinion  that  the  promise  to  pay  for  the 
past  obligation  was  a  valuable  consideration  therefor; 
and  that  a  request  might  be  implied. 

Accordingly,  judg-ment  was  given  for  Hicks. 

BUIiING  LAW 
Story  Case  Answer 

If  a  person  requests  another  to  perform  some  act 
or  service  for  him,  and  there  is  no  mention  made  about  / 
compensation  therefor,  \yhen  the  act  or  service  is  per-  ^ 
formed,  it  is  generally  held  that  in  the  request  there 
was  an  implied  promise  to  pay  for  the  services.  The 
consideration  is  the  performance  of  the  act  or  service 
for  the  implied  promise  to  pay. 

Sometimes,  a  request  is  implied  from  the  circum- 
stances surrounding  the  doing  of  the  act,  as  in  the 
Court  Case  of  Hicks  vs.  Burhans.  The  circumstances, 
however,  must  clearly  indicate  knowledge  on  the  part 
of  the  obligor  at  the  time  the  act  was  done;  also  an 
acquiescence  on  his  part  indicated  by  a  failure  to  ob- 
ject, and  finally  by  an  acceptance  of  the  benefits,  result- 
ing from  the  service.  Ward  can  recover,  in  the  Story 
Case,  the  reasonable  value  of  his  services. 


G.     There  Is  No  Consideration 

(1)     In  the  Promise  to  Perform  What  One  Is  Bound  to  Do 

STOEY  CASE 

Charles  Abbott,  a  bridge  builder,  made  a  contract 
with  Frank  Bates,  to  build  a  bridge.  Abbott  agreed  to 
complete  the  work  within  four  months,  and  Bates 


202  CONTRACTS 

agreed  to  pay  him  $5,000.  At  the  end  of  one  month, 
Abbott  declared  that  he  was  about  to  discontinue  the 
work,  because  he  could  not  employ  men  at  $4  a  day, 
as  he  had  planned.  Bates  was  in  haste  to  have  the 
bridge  completed,  and,  therefore,  agreed  in  writing 
with  Abbott  to  pay  one-half  the  extra  cost  of  the  men  if 
Abbott  would  continue  the  work.  With  tliis  under- 
standing Abbott  employed  ten  men  at  $6  a  day  and 
completed  the  bridge  on  time.  Thereupon,  Bates  re- 
fused to  pay  Abbott  anything  above  the  $5,000  first 
agreed  upon,  on  the  ground  that  his  second  promise 
was  not  binding.  Abbott  brought  suit  to  recover  one- 
half  the  extra  cost  of  the  men,  in  accordance  with  the 
second  contract.    Will  the  action  be  sustained? 

RULING  COURT  CASE 

Lingenfelder  vs.  The  Wainwright  Brewing  Com- 
pany, Volume  103  Missouri  Reports,  Page  578. 

Lingenfelder  was  employed  by  Wainwright  to  draw 
plans  for  and  to  superintend  the  construction  of  brew- 
ery buildings.  He  was  to  receive  a  commission  of  five 
per  cent  on  the  cost  of  the  buildings,  but  not  on  the 
placing  of  any  machinery.  Wainwright  awarded  the 
contract  for  a  refrigerator  plant  to  be  installed  in  one 
of  the  buildings  to  De  La  Vergne  Ice  Company.  Now 
Lingenfelder  was  the  president  of,  and  interested  in, 
a  rival  company  engaged  in  the  same  line  of  business ; 
angry  because  his  company  had  not  been  given  the 
contract  for  the  plant,  he  took  away  his  plans,  recalled 
his  superintendent,  and  declared  that  he  had  aban- 
doned the  project.  Wainwright  was  in  haste  to  com- 
plete the  brewery,  but  was  imable  to  secure  anyone  to 
take  Lingenfelder 's  place  without  the  loss  of  much 


CONTRACTS  203 

time.  Wainwright  offered  to  allow  Lingenfelder  a  five 
per  cent  commission  on  the  cost  of  installing  the  re- 
frigerator plant,  if  he  would  complete  his  contract.  He 
agreed,  and  when  the  building  was  finished  and  he  de- 
manded his  extra  commission,  it  was  refused  by  Wain- 
wright. This  suit  was  then  brought  by  the  executors 
of  Lingenfelder  for  the  extra  commission. 

Mr.  Justice  Gantt  delivered  the  opinion  of  the  court : 
**The  plaintiff  was  not  entitled  to  recover  because 
there  was  no  consideration  for  the  promise  of  the  de- 
fendant to  allow  the  architect  the  extra  commission. 
The  original  contract  here  was  not  modified  in  any 
way;  Lingenfelder  promised  to  do  for  the  extra  five 
per  cent  just  what  he  had  already  bound  himself  to 
do  by  the  original  contract.  He  gave  nothing  new  and 
promised  nothing  new.  A  promise  to  do  what  one  is 
already  bound  to  do  is  in  law  no  consideration  for 
the  promise  of  the  other  party. 

"Lingenfelder  was  bound  by  his  contract  to  design 
and  superintend  the  erection  of  this  building.  Under 
the  new  promise  he  was  not  to  do  anything  more  or 
different.  What  benefit  was  to  accure  to  Wainwright  f 
He  was  to  receive  the  same  service  from  Lingenfelder 
imder  the  new  contract  that  Lingenfelder  was  bound 
to  tender  under  the  original  contract.  What  loss, 
trouble  or  inconvenience  could  result  to  Lingenfelder, 
that  he  had  not  already  assumed? 

**  *When  a  party  merely  does  what  he  has  already 
obligated  himself  to  do,  he  cannot  demand  an  addi- 
tional compensation  therefor,  and  although  by  taking 
advantage  of  the  necessities  of  his  adversary  he  ob- 
tains a  promise  for  more,  the  law  will  regard  it  as 


204  CONTRACTS 

nudum  pactum,  and  will  not  lend  its  process  to  aid  in 
the  wrong.'  " 

Judgment  was  given  for  the  defendant,  The  Wain- 
wright  Brewing  Company. 

EULING  LAW 
Story  Case  Answer 

A  promise  to  do  that  which  one  is  already  bonnd  to 
do,  is  not  sufficient  to  support  a  counter  promise.  In 
the  Story  Case,  Bates  received  nothing  more  in  return 
for  his  promise  than  he  was  entitled  to  receive,  and 
Abbott  has  suffered  nothing,  for  he  was  already  bound 
to  build  the  house. 

Of  course,  it  is  always  possible  for  the  parties  to  re- 
scind or  change  their  old  agreement.  If,  in  the  above 
case,  Bates  had  informed  Abbott  that  he  wished  his 
bridge  finished  a  month  earlier  than  the  contract  stipu- 
lated, and  was  willing  to  pay  one-half  the  extra  cost 
of  the  men,  if  Abbott  would  double  his  force,  and  Ab- 
bott acted  in  reliance  on  this  offer,  obviously  there  is 
a  new  mutual  consideration  for  a  new  agreement.  As 
the  case  stands,  however,  Abbott  did  not  promise  to 
add  anything  new  in  exchange  for  the  promise  of 
Bates;  hence,  there  is  no  consideration  coming  from 
Abbott  and  he  cannot  recover. 


(2)     Where  There  Is  Impossibility  of  Performance 
STOET  CASE 

Having  been  arrested  for  confidence  game  alleged  to 
have  been  played  upon  a  stranger  in  the  town,  James 
Howell  employed  Simon  Sawyer,  a  friend,  to  defend 
him  in  court.  Howell  agreed  to  pay  Sawyer  $100  in 
return  for  Sawyer's  promise  to  conduct  the  defense  in 


CONTRACTS  205 

court.  Howell,  however,  knew  at  the  time  of  making 
the  contract  that  Sa^^^yer  was  not  a  lawyer  and  in  no 
way  qualified  to  act.  When  Sawyer  failed  to  comply 
with  his  contract,  Howell  brought  suit  for  its  breach. 
Sa^v^rer  put  in  defense  that  Howell  knew  at  the  time  of 
making  the  contract,  that  he,  Sawyer,  was  not  a  lawyer. 
Is  this  a  good  defense? 

BULINO  C0T7BT  CASE 

Kelley  vs.  The  Mutual  Life  Insurance  Company,  Vol- 
ume 109 ;  Federal  Reporter,  Page  56. 

Edward  Kelley  made  application  to  the  Mutual  Life 
Insurance  Company  to  have  his  life  insured;  and  a 
policy  was  granted  to  him.  By  the  contract  made  be- 
tween them,  if  all  the  premiums  were  paid,  the  Com- 
pany agreed  to  pay  Mrs.  Kelley  the  amount  of  the 
policy  at  the  death  of  Edward  Kelley.  In  the  policy 
there  was  the  statement  made  by  Kelley :  *  *  I  will  not 
die  by  my  own  hand,  sane  or  insane."  Thereafter, 
however,.  Kelley  became  insane,  and  committed  sui- 
cide. His  wife,  Mrs.  Kelley,  brought  this  action  to  re- 
cover the  amount  of  the  policy. 

The  defense  of  the  company  was  that  Kelley  had 
promised  not  to  die  by  his  own  act,  sane  or  insane; 
and  having  done  so,  the  policy  was  void.  But  she  con- 
tended that  this  promise  was  not  binding  because  it 
was  impossible  of  performance. 

The  Court  said:  "When  Kelley  agreed  not  to  com- 
mit suicide  while  insane,  he  was  agreeing  to  do  that 
which  was  impossible  to  observe.  He  knew  this  when 
he  so  agreed  and  the  company  knew  it  equally  well.  It 
was  an  impossible  contract,  impossible  to  observe ;  and 
an  impossibility  knowTi  by  both  parties  when  they  so 


206  CONTEACTS 

agreed.  A  learned  text  writer  says:  *A  mntnal  un- 
derstanding between  parties  to  do  what  both  know 
to  be  impossible,  is  vain  and  idle,  lacking  the  elements 
of  a  contract/  ** 

Accordingly,  it  was  held  that  Mrs.  Kelley  might 
recover. 

ETJLINO  LAW 

Story  Case  Answer 

A  promise  to  do  some  act  which  is  legally  or  physi- 
cally impossible  does  not  constitute  a  good  considera- 
tion necessary  to  create  a  legally  binding  contract. 
This  impossibility  must  be  known,  however,  to  both 
parties.  A  promise  by  one  person  to  sell  me  land  not 
belonging  to  him,  when  I  am  aware  that  he  does  not 
own  it,  does  not  create  a  contract  between  us.  Here, 
there  is  a  legal  impossibility.  A  promise  by  one  to  go 
from  New  York  to  London  in  one  day,  in  consideration 
of  a  certain  sum  of  money,  is  a  physical  impossibility 
and  creates  no  contract  between  the  parties. 

The  defense  of  Sawyer,  in  the  Story  Case,  is  effec- 
tive, since  Howell  knew  at  the  time  the  alleged  contract 
was  made,  that  Sawyer  could  not  perfonn. 


(3)     When  the  Undertaking  Is  Gratuitous 
STOBY  CASE 

H.  L.  Ailing  was  running  for  the  office  of  sheriff  of 
Ross  County.  He  had  been  campaigning  extensively  in 
the  southern  end  of  the  county  when  one  of  his  friends 
came  to  him  and  said,  ''Ailing,  you  ought  to  have  some- 
one in  the  northern  end  of  the  county  to  make  some 
speeches  for  you.    I  know  that  you  are  busy  here.    If 


CONTRACTS  207 

you  desire,  I  will  do  some  campaigning  up  there  for 
you." 

Ailing  replied,  "That  is  splendid,  Henry.  I  was  in- 
tending to  hire  a  man  to  work  in  that  part  of  the 
county,  but  this  relieves  me.    When  can  you  begin  1 ' ' 

To  this,  Henry  Marx  answered,  "I  promise  to  be 
there  within  three  days  and  will  campaign  the  entire 
end  of  the  county." 

Ailing  did  not  send  anyone  else  to  the  northern  end 
of  the  county  because  he  thought  that  Marx  was  cov- 
ering the  territory.  After  he  lost  the  election  by  five 
votes,  he  learned  that  Marx  had  been  working  for  his 
opponent.  He  immediately  brought  suit  for  Marx's 
breach  of  contract  to  campaign  for  him. 

Marx  defended  on  the  ground  that  his  promise  to 
work  for  Ailing  was  without  consideration  and  was  in- 
tended to  be  gratuitous;  hence,  he  claimed  it  was  not 
binding.    Is  this  true? 

EULUTO  COUET  CASE 

TJiorne^  vs.  Deas,  Volume  4  Johnson  {New  YorJc)  Re- 
ports, Page  84. 

Thorne  and  Deas  were  co-owners  of  a  certain  vessel, 
which  was  being  prepared  to  sail  from  a  point  in  Amer- 
ica to  Europe.  In  a  conversation  as  to  the  advisability 
of  insuring  the  vessel  on  the  trip,  they  decided  in  favor 
of  the  plan.  Deas,  thereupon,  promised  Thorne  that 
he  would  immediately  procure  insurance  on  the  ves- 
sel for  the  coming  voyage.  But  he  neglected  to  secure 
the  policy.  WTiile  out  at  sea  the  vessel  met  with  a 
storm,  and  went  dowTi.  Thorne  then  brought  this  ac- 
tion against  Deas  for  damages.  He  claimed  that  he 
had  suffered  damages  from  the  failure  of  Deas  to  do 
as  he  promised. 


208  CONTRACTS 

Deas  insisted  that  he  was  not  liable  for  failing  in 
his  promise,  because  there  was  no  consideration;  he 
contended  that  his  offer  to  procure  insurance  on  the 
vessel  was  purely  gratuitous,  and  that  failure  to  carry- 
out  a  gratuitous  undertaking  does  not  render  one  li- 
able as  a  breach  of  a  contract. 

Decision:  The  promise  of  Deas  to  procure  insur- 
ance upon  the  vessel  in  question  was  a  purely  gratui- 
tous offer  on  his  part,  it  was  unsupported  by  any  con- 
sideration whatsoever  moving  from  Thorne;  such  be- 
ing the  case,  there  was  no  contract  between  the  parties ; 
and  the  failure  of  Deas  to  procure  the  insurance  did 
not  render  him  liable  for  the  damages  which  resulted 
from  his  neglect. 

Therefore,  judgment  was  given  for  Deas  in  this 
action. 

RULING  LAW 
Story  Case  Answer 

It  is  very  apparent  from  what  has  been  said  hereto- 
fore, that  a  purely  gratuitous  undertaking  or  promise 
by  a  person  does  not  legally  obligate  him  to  carry  out 
the  undertaking  or  perform  the  promise.  In  the  Story 
Case,  the  conduct  of  Henry  Marx  was  morally  repre- 
hensible, but  his  promise  to  assist  his  friend  in  his 
election  campaign  imposed  no  legal  obligation  upon 
him,  and  his  failure  to  perform  what  he  promised,  con- 
ferred no  right  upon  Ailing  for  damages  against  him. 


(4)     Where  the  Act  Has  Been  Previously  Performed 
on  One  Side 
STORY  CASE 

Edward  Latham  lost  all  his  wealth  in  a  speculation 
and  was  forced  to  accept  the  charity  of  his  friends. 


CONTRACTS  209 

A  certain  Dr.  Hargis  promised  Latham  that  he  would 
be  responsible  for  his  living  expenses,  until  he  could 
become  located  again.  For  three  months,  Latham  lived 
with  Hargis  and  was  made  very  comfortable.  Then 
Latham  came  into  a  large  fortune  upon  the  decease  of 
his  rich  uncle. 

Latham  said  to  Hargis,  "Doctor,  I  am  indebted  to 
you  for  your  kindnesses  to  me  and  I  shall  repay  you 
$150  for  the  expense  you  have  incurred.  Your  prom- 
ise to  take  care  of  me  has  been  generously  kept.  For 
this  promise,  I  promise  to  repay  you.  I'll  send  you 
the  check  within  the  week." 

But  several  weeks  passed,  and  no  check  was  received 
by  Hargis.  Then  he  mentioned  the  fact  to  Latham 
who  said,  *'I  have  decided  not  to  pay  you.  I  have  con- 
sulted my  attorneys  and  they  inform  me  that  my  prom- 
ise to  repay  you  was  not  supported  by  any  consider- 
ation given  by  you." 

Hargis  sued  for  the  $150,  alleging,  as  a  consider- 
ation, the,  promise  which  he  had  made  to  Latham  to 
keep  him  while  he  was  without  money.  Should  the 
court  allow  him  to  recover? 

RULING  COURT  CASE 

Josephine  Moore  vs.  Nelson  Elmer,  Volume  180 
Massachusetts  Reports,  Page  15. 

Williard  Elmer  held  a  mortgage  upon  certain  prop- 
erty which  was  owned  by  Josephine  Moore,  the  plain- 
tiff in  this  action.  Josephine  Moore  pretended  to  be 
a  prophet  and  a  clairvoyant.  Williard  Elmer,  during 
his  lifetime,  had  been  to  see  her  several  times,  and 
had  had  her  make  a  so-called  reading  of  his  future. 
He  executed  a  writing  to  her  on  one  occasion,  by  which 


210  CONTRACTS 

he  promised  to  give  her  the  mortgage  which  he  held 
upon  her  land,  in  consideration  of  the  sittings  which 
he  had  had.  After  the  death  of  Williard  Elmer,  Nel- 
son Elmer  was  made  his  personal  representative.  In 
clearing  up  the  estate  of  Williard,  Nelson  was  pro- 
ceeding to  foreclose  this  mortgage  against  Josephine 
Moore.  She  resisted  the  foreclosure  on  the  ground 
that  Williard  had  agreed  to  release  the  mortgage  to 
her.  She  brought  this  bill  to  restrain  the  personal  rep- 
resentative, Nelson  Elmer,  from  making  preparations 
towards  a  foreclosure. 

Nelson  insisted,  that  the  written  agreement  executed 
by  Williard  during  his  lifetime,  was  not  binding,  be- 
cause it  was  not  supported  by  a  consideration.  The 
sittings,  which  had  been  given  him,  had  been  given  be- 
fore any  promise  was  made  to  pay  her  therefor.  Such 
a  consideration  is  past,  and  cannot  support  a  present 
promise. 

Decision:  A  promise  to  pay  for  services  already 
rendered  is  without  consideration  and  is  not  legally  en- 
forcible.  Such  a  consideration  is  said  to  be  a  past  or 
executed  consideration^  In  this  case,  the  services  which 
Josephine  Moore  seeks  to  establish  as  a  consideration 
for  the  promise  of  Williard  Elmer  to  release  the  mort- 
gage, were  performed  before  the  promise  was  made. 
When  the  services  were  rendered  there  was  no  promise 
made  to  pay  for  them.  A  subsequent  promise  to  pay 
for  them  is  not  binding,  for  the  reason  that  it  is  with- 
out a  consideration. 

Accordingly,  judgment  was  given  for  Nelson  Elmer 
in  this  suit,  and  he  was  not  restrained  from  proceed- 
ing to  foreclose  the  mortgage. 


CONTRACTS  2U 

RULING  LAW 
Story  Case  Answer 

When  a  person  performs  some  service  or  act  for  an- 
other, without  the  knowledge  of  the  latter,  usually 
this  imposes  no  legal  liability  upon  the  former  to  pay 
for  the  services.  Nor  will  such  past  services  rendered 
without  request  or  implied  request,  operate  as  a  suffi- 
cient consideration  to  make  binding  a  present  promise 
to  pay  for  them.  When  it  is  reasonable  to  conclude 
that  the  services  were  rendered  as  a  charity,  a  request 
to  pay  cannot  be  implied.  Any  subsequent  promise 
to  pay  is  without  consideration,  and  not  binding.  Thus, 
in  the  Story  Case,  the  services  wliich  Dr.  Hargis  per- 
formed for  Latham  do  not  constitute  a  sufficient  con- 
sideration to  support  the  promise  subsequently  made 
by  Latham  to  pay  for  them. 


(5)     In  a  Moral  Obligation 
STOBY  CASE 

Abel  Davis  risked  his  life,  and  suffered  severe  in- 
juries, in  rescuing  James  Tilloson's  daughter  from  his 
burning  home  during  Tilloson's  absence  from  the  city. 
When  Tilloson  returned,  he  visited  Davis  at  the  hos- 
pital and  there  promised  to  give  him  two  thousand 
dollars  for  his  brave  deed.  Later,  when  Davis  recov- 
ered, Tilloson  refused  to  pay  the  money,  although  he 
could  well  afford  to  carry  out  his  promise.  Davis 
brought  suit  on  contract  to  recover  two  thousand  dol- 
lars.   Can  he  recover  ? 

KULING  COTTET  CASE 

Allen  vs.  Bryson,  Volume  67  Iowa  Reports,  Page 
591 ;  Volume  56  American  Reports,  Page  358. 


212  CONTRACTS 

Allen  and  Bryson  were  brothers-in-law;  they  were 
both  engaged  in  the  practice  of  law,  not  as  partners, 
but  each  independently.  It  seems,  that  occasionally 
they  would  assist  each  other  in  special  work  or  special 
cases.  Allen,  on  one  occasion,  did  considerable  work 
for  Bryson  in  a  certain  case.  At  the  time  the  work  was 
done,  neither  discussed  or  contemplated  that  compen- 
sation should  be  made  for  the  services  thus  rendered. 
But  afterwards,  Bryson  promised  to  pay  for  the  ser- 
vices. Later  he  changed  his  mind,  and  refused  to  pay 
for  them.  Thereupon,  Allen  instituted  this  action  to 
recover  therefor. 

Bryson  insisted  that  he  was  not  liable  upon  his 
promise  to  pay  for  the  services  in  question,  because  his 
promise  was  made  without  any  consideration  from 
Allen.  But  it  was  contended  by  Allen  that  he  was  at 
least  under  a  moral  obligation  to  pay  for  his  services 
which  had  been  rendered,  and  a  subsequent  promise 
to  pay  for  them  created  a  binding  obligation. 

Decision:  A  moral  obligation  standing  alone  can- 
not be  made  the  consideration  for  a  subsequent  prom- 
ise to  perform  that  obligation.  In  this  case,  assuming 
that  Bryson  was  under  a  moral  obligation  to  compen- 
sate Allen  for  his  services,  it  does  not  render  a  sub- 
sequent promise  to  pay  for  the  services  legally  binding. 

Therefore,  judgment  was  given  for  Bryson  in  this 
action. 

EULING  LAW 
Story  Case  Answer 

It  was  stated  that  past  services  will  not  constitute 
a  sufficient  consideration  to  support  a  subsequent 
promise  to  pay  for  such  services.  This  is  true,  though 
the  person  benefited  is  under  a  moral  obligation  to  re- 


CONTRACTS  213 

ciprocate  for  them.    Davis,  in  the  Story  Case,  cannot 
recover. 


(6)     In  a  Promise  That  Is  Too  Vague 
STORY  CASE 

The  Style-No-Better  Haberdasher  Store,  owned  by 
Lawrence  Dunlap  was  for  sale.  George  Ulman  de- 
sired to  purchase  it  but  he  and  Dunlap  could  meet 
on  no  definite  terms.  However,  as  each  of  them  was 
anxious  to  consummate  the  transaction,  they  made  the 
following  writing : 

"November  5,  1914. 
In  consideration  of  the  promise  of  George  Ul- 
man to  pay  at  a  future  date,  I  promise  to  sell  him 
some  of  my  stock  of  neckware,  etc.,  and  to  deliver 
the  same  at  a  future  date. 

(Signed)     Lawrence  Dunlap 
George  Ulman.'* 

But  they  were  later  unable  to  agree  as  to  the  amount 
to  be  paid,  the  amount  of  stock  to  be  delivered,  and 
the  time  of  payment  and  the  time  of  delivery.  Ulman 
claimed  that  Dunlap  was  unreasonable,  because  he  no 
longer  wanted  to  sell  and  not  because  of  any  valid 
objection  to  the  terms.    This  Dunlap  admitted. 

Should  the  suit  which  Ulman  brought  against  Dun- 
lap for  breach  of  the  contract  of  sale  be  decided  in 
favor  of  Ulman? 

EUIiING  COTJET  CASE 

Marble  vs.  Standard  Oil  Company,  Volume  169  Mas- 
sachusetts Reports,  Page  559. 


214  CONTRACTS 

Marble*  brought  suit  upon  contract  against  the 
Standard  Oil  Company  for  failure  to  sell  him  oil,  and 
for  failure  to  make  him  exclusive  agent  in  his  terri- 
tory. The  evidence  did  not  show  any  specific  con- 
tract, only  an  arrangement  by  which  the  Standard  Oil 
Company  agreed  to  protect  Marble  in  his  trade ;  that 
is,  to  deal  with  him  on  favorable  terms,  so  that  he 
could  compete  successfully  with  other  parties  selling 
in  the  same  territory.  There  was  no  evidence  that  the 
arrangement  was  to  continue  for  any  particular  time, 
or  that  Marble  was  bound  to  buy  any  oil. 

Justice  Knowlton  gave  the  opinion  of  the  Court: 
**The  agreement  was  too  indefijiite  and  too  general 
to  contain  a  consideration  and  be  enforcible  as  a  con- 
tract.'* Judgment  was  given  for  the  Standard  Oil 
Company. 

BULINO  LAW 
Story  Case  Answer 

A  promise  may  be  too  vague  and  uncertain  to  sus- 
tain a  consideration  and  be  enforcible  as  a  contract. 
The  parties  must  make  their  own  agreement  and  not 
expect  the  Court  to  construct  one  for  them.  If  an 
agreement  is  so  uncertain  and  ambiguous  that  a  Court 
cannot  determine  what  the  parties  intended,  it  will 
say  there  is  no  obligation  and  therefore  no  contract. 
For  this  reason  there  is  no  contract  in  the  Story  Case. 


(7)     In  a  Promise  to  Discharge  the  Balance  of  a  Debt 

on  Payment  of  Part 

STORY  CASE 

Leland  Culhan  owed  George  Getz  the  sum  of  $60. 
The  day  of  payment  was  long  past  and  still  Culhan  was 


CONTRACTS  215 

unable  to  pay.  Finally  Getz  came  to  Culhan*ancl  said, 
'*  CuUiaii,  you  are  in  mighty  bad  luck.  I  don't  want  to 
press  you  for  the  little  debt  you  owe  me  but  I  need 
the  money.  I'll  make  this  agreement  with  you.  If  you 
pay  me  what  you  get  from  the  sale  of  any  personal 
property  you  might  own,  I'll  call  our  debt  square." 

Culhan,  thereupon,  sold  a  cow  and  turned  the  money, 
thirty-two  dollars,  over  to  Getz.  Two  days  later  Getz 
sued  Culhan  for  the  rest  of  the  money.  Culhan  de- 
fends with  the  above  agreement.    How  do  you  decide? 

RULING  COURT  CASE 

Bender  vs.  Been,  Volume  78  Iowa  Reports,  Page  283 ; 
Volume  5  Lawyers'  Reports  Annotated,  Page  596. 

Been  signed  a  promissory  note  for  $220,  made  pay- 
able to  Bender.  He  was  not  able  to  make  payment 
thereof  when  it  fell  due;  he  went  to  Bender  and  ex- 
plained that  he  was  unable  to  pay  the  note  and  asked 
for  an  extension  of  time  or  some  other  settlement  of 
the  note.  After  some  negotiations.  Bender  decided  to 
accept  part  payment  in  satisfaction  of  the  whole 
amount  due.  The  following  agreement  was  made  in 
writing  and  signed  by  them : 

"  Received  of  Charles  Been  the  sum  of  $40, 
and  the  same  credited  on  a  note  given  for  $220, 
signed  by  Charles  Been.  The  consideration  of 
payment  of  the  above  $40  is  that  said  Charles 
Been  is  to  be  released  on  said  note." 
Thereafter,  however,  Bender  sued  on  the  note  for 
the  balance  of  the  amount  called  for  therein. 

It  was  contended  by  Been  that,  by  their  agreement, 
he  was  no  longer  liable  upon  the  note.  By  Bender  it 
was  insisted  that  the  agreement  was  not  binding  upon 


216  CONTKACTS 

him,  because  there  was  no  consideration  in  mere  part 
payment  of  a  larger  sum  then  due. 

Mr.  Justice  Beck  delivered  the  opinion  of  the  Court, 
in  which  it  is  said:  **It  is  a  familiar  rule  of  the  law 
that  a  payment  of  a  part  of  a  note  or  a  debt  existing 
in  any  different  form,  in  discharge  of  the  whole,  will 
not  bar  the  recovery  of  the  balance  unpaid.  The  rule 
is  based  upon  the  principle  that  there  is  no  consider- 
ation for  the  promise  of  discharge ;  the  sum  paid  being 
in  fact  due  from  the  payee  on  the  debt,  he  rendered 
no  consideration  to  the  payee  for  his  promise  to  re- 
lease the  balance  of  the  debt.'' 

Accordingly,  judgment  was  given  for  Bender  in  this 
action. 

RULING  LAW 
Story  Case  Answer 

Where  a  person  owes  a  certain  sum  of  money  to  an- 
other, an  agreement  between  them  whereby  the  cred- 
itor releases  the  debtor,  in  consideration  of  a  smaller 
sum  paid  is  not  a  binding  contract  upon  them  so  as  to 
prevent  the  creditor  from  recovering  the  balance  due. 
In  such  a  case,  it  is  apparent  that  there  is  no  consid- 
eration for  the  agreement,  because  the  debtor  is  under 
obligation  to  pay;  and  the  creditor  is  entitled  to  call 
for  the  full  amount.  A  promise  to  accept  less  than 
the  full  amount  is  not  supported  by  a  consideration. 
This  case  should  be  clearly  distinguished  from  a  com- 
position with  creditors,  where  creditors  agree  together. 
Also,  this  applies  only  where  the  debt  is  presently  due. 
If,  for  example,  the  debt  is  not  due  for  thirty  days,  an 
agreement  between  them  whereby  the  creditor  accepts 
in  the  present  a  less  sum  is  binding ;  here  a  good  and 


CONTRACTS  217 

sufficient  consideration  is  found  in  the  debtor's  sur- 
rendering his  right  to  wait  thirty  days  before  paying. 
It  follows  from  what  has  been  said  that  there  was  no 
consideration  for  the  promise  of  Getz,  in  the  Story 
Case,  to  accept  less  than  the  full  amount  of  his  debt. 
Judgment  must  be  given  for  Getz. 


H.     An  Obligation  Unenforcible  by  Some  Rule  of  Law 

Will  Be  Revived  by  a  New  Promise 

STORY  CASE 

On  June  1,  1907,  Reeve  Hanunon  made  a  note  pay- 
able to  John  Patch  in  one  year.  "VVTien  the  year  was 
up,  the  note  was  not  renewed  nor  did  Hammon  pay  it. 
On  June  3, 1914,  Patch  recalled  that  the  money  was  due 
him  and  requested  Hammon  for  it.    Hammon  said: 

**I  suppose  that  you  are  aware  that  I  am  not  com- 
pelled to  pay  this  money,  because  the  Statute  of  Limit- 
ations says  that  a  claim  that  has  not  been  renewed  or 
judgment  demanded  in  six  years  is  void?  But  I  want 
to  do  the  honest  thing,  so  I  will  pay  you  the  money 
within  the  week." 

At  the  end  of  the  next  week  Patch  sued  Hammon  for 
the  money.  Hammon  defended  on  the  ground  of  the 
Statute  of  Limitations.  Patch  replied  that  after  the 
Statute  had  run,  Hammon  agreed  to  pay  the  amount. 
Hammon  answered  that  this  promise  was  gratutious 
without  consideration  and  therefore  not  enforcible. 

Which  has  the  better  case  ? 

BULING  COURT  CASE 

Dusenbury  vs.  Hoyt,  Volume  53  New  York  Reports, 
Page  521. 

Hoyt,  the  defendant  in  this  case,  executed  a  promis- 
sory note  payable  to  the  order  of  Dusenbury,  the  plain- 


218  CONTRACTS 

tiff.  Before  the  note  was  dne,  Hoyt  was  declared  a 
bankrupt  by  judicial  proceedings.  The  effect  of  this 
proceeding  was  to  cancel  all  the  debts  which  Hoyt  had 
previously  owed.  But  after  he  had  received  his  dis- 
charge, he  promised  Dusenbury  that  he  would  pay  the 
note,  nevertheless.  But  when  the  note  was  presented 
for  payment  he  changed  his  mind  again  and  refused 
to  settle  it.  Dusenbury  then  instituted  this  action 
against  him  for  the  recovery  of  the  amount  due  under 
the  note. 

It  was  insisted  by  Hoyt  that  he  was  not  liable  be- 
cause the  new  promise  to  pay  the  note  was  without  any 
consideration. 

Decision:  In  this  case  the  effect  of  the  decree  in 
bankruptcy  was  to  prevent  any  action  from  being 
brought  against  Hoyt  on  debts  owed  by  him,  previous 
to  the  decree.  It  did  not  entirely  destroy  the  obliga- 
tion to  pay,  but  it  gave  him  a  defense  to  an  action 
thereon ;  or,  in  other  words,  it  deprived  the  creditor  of 
the  right  to  sue.  But,  after  receiving  his  discharge, 
and  then  making  a  new  promise  to  pay,  the  protection 
of  the  law  was  removed ;  he  no  longer  had  the  defense 
and  the  creditor  was  reinvested  with  full  right  to  sue 
on  the  note. 

Mr.  Justice  Andrews  said  in  part:  **The  34th  sec- 
tion of  the  bankrupt  law  declares  that  a  discharge  in 
bankruptcy  releases  the  bankrupt  from  all  debts  prov- 
able under  the  act,  and  that  it  may  be  pleaded  as  a  full 
and  complete  bar  to  all  suits  brought  thereon.  The 
legal  obligation  of  the  bankrupt  is  by  force  of  positive 
law,  discharged,  and  the  remedy  of  the  creditor  exist- 
ing at  the  time  the  discharge  was  granted  to  recover 
his  debt  by  suit  is  barred.    But  the  debt  is  not  paid  by 


CONTRACTS  219 

the  discharge.  The  moral  obligation  of  the  bankrupt 
to  pay  it  remains.  It  is  due  in  conscience,  although 
discharged  in  law,  and  this  moral  obligation,  uniting 
with  a  subsequent  promise  by  the  bankrupt  to  pay  the 
debt,  gives  a  right  of  action.** 

Accordingly,  judgment  was  given  for  Dusenbury  in 
this  action. 

BTTLING  LAW 
Story  Case  Answer 

Under  certain  circumstances  a  person  may  be  adju- 
dicated a  bankrupt.  All  his  assets  are  used  in  paying 
his  debts  ratably ;  if  the  assets  are  insufficient  to  pay 
all  his  debts,  those  unpaid,  or  the  parts  remaining  un- 
paid, are  said  to  be  discharged.  Also,  if  a  creditor  does 
not  sue  his  debtor  on  a  claim  within  a  certain  time,  us- 
ually six  years,  the  claim  is  said  to  be  barred  by  the 
Statute  of  Limitations.  In  both  cases,  the  debt  is  still 
morally  due  the  creditor;  but  for  reasons  of  policy 
the  law  says  that  an  action  may  not  be  brought  there- 
on ;  the  remedy  alone  is  barred,  without  extinguishing 
the  debt.  The  debtor  may  if  he  chooses,  waive  this 
protection  given  to  him  by  the  statutes.  If  he  makes 
any  promise  stating  that  he  will  pay  the  obligation, 
this  amounts  to  a  waiver  and  he  may  thereafter  be 
compelled  to  pay  the  obligation.  In  the  Story  Case, 
Patch  can  recover  on  the  note. 


III.   CONSENT  OF  EITHER  PARTY  MUST  BE  REAL 

1.    There  May  Be  Lack  of  Consent  Because  of  Mistakes 

A.    Mistake  as  to  the  Nature  of  the  Contract 

STOBY  CASE 

Mr.  Joshua  Jacobs  was  a  very  old  man  and  could 
not  see  very  well.    One  day,  Mr.  Vassermann  called 


220  CONTEACTS 

upon  him  and  asked  him  if  he  wished  to  purchase 
shares  of  stock  in  a  corporation  which  he,  Vassermann, 
was  promoting.  After  some  discussion  Mr.  Jacobs  de- 
cided that  he  would  make  the  purchase.  Mr.  Vasser- 
mann handed  him  a  paper  and  told  him  to  sign  it. 
As  Mr.  Jacobs  did  not  have  his  glasses  with  him  and 
could  not  read  the  paper,  he  asked  Vassermann  to  tell 
him  of  its  contents.  The  latter  replied  that  it  was 
merely  an  agreement  to  purchase  ten  shares  of  stock 
in  the  corporation  at  $100  each.  Mr.  Jacobs  signed  his 
name  to  the  instrument.  However,  it  subsequently  ap- 
peared that  the  paper  signed  was  an  agreement  by 
Mr.  Jacobs  to  sell  his  farm  to  Vassermann  for  ten 
thousand  dollars.  Of  course,  Mr.  Jacobs  refused  to 
sell  his  farm  for  that  price.  He  was  sued,  thereupon, 
on  this  alleged  agreement.  What  should  be  the  decis- 
ion of  the  Court  in  this  case? 

EULING  COURT  CASE 

Walher  vs.  Ebert,  Volume  29  Wisconsin  Reports, 
Page  194. 

Ebert,  the  defendant  in  this  action,  was  a  German 
by  birth  and  education,  and  was  unable  to  read  or 
write  the  English  language.  Certain  persons,  who 
were  the  owners  of  a  certain  patented  machine,  came 
to  Ebert  and  offered  to  sell  him  an  interest  in  their 
patent  rights  and  to  give  him  an  agency  to  sell  the  man- 
ufactured articles.  Ebert  thought  well  of  the  proposi- 
tion and  accepted  it.  Ebert  was  then  handed  a  paper 
by  these  persons  to  sign.  Being  unable  to  read,  he 
asked  what  the  paper  was.  They  replied  that  it  was 
the  contract,  and  contained  the  terms  of  the  agreement, 
which  they  had  just  made.    Ebert,  believing  this,  and 


CONTRACTS  221 

relying  upon  their  statements,  signed  his  name  to  the 
paper.  The  paper,  as  a  matter  of  fact,  had  nothing  to 
do  with  the  contract  which  they  had  made,  but  was  in 
form  a  promissory  note,  by  which  Ebert  agreed  to  pay 
to  them  a  large  sum  of  money.  These  persons  immedi- 
ately transferred  the  note  to  Walker,  the  plaintiff  in 
this  action.  He  demanded  payment  and  Ebert  refused 
to  pay  it.    Walker  then  sued  him. 

Ebert  contended  that  he  was  not  liable  on  the  note, 
because  there  was  a  mistake  as  to  the  nature  of  the 
instrument  he  had  signed.  He  had  intended  to  sign  a 
contract  for  the  sale  of  an  interest  in  a  patent,  and 
for  an  agency  to  sell,  and  he  had  never  intended  to 
sign  any  note  of  this  kind.  Mr.  Chief  Justice  Dixon, 
who  delivered  the  opinion  of  the  Court,  said:  "The 
party  whose  signature  to  such  paper  is  obtained  by 
fraudulent  representations  as  to  the  character  of  the 
paper  itself,  and  who  is  ignorant  of  such  character,  and 
has  no  intention  of  signing  it,  and  who  is  guilty  of  no 
negligence  in  affixing  his  signature  or  in  ascertaining 
the  character  of  the  instrument,  is  no  more  bound  by 
it  than  if  it  were  a  total  forgery,  the  signature  in- 
cluded.'* 

In  accordance  with  the  opinion,  the  Court  decided 
that  judgment  should  be  given  for  Ebert  in  this  action. 

RULING  LAW 
Story  Case  Answer 

Earlier  in  this  work,  it  was  stated  that  a  mutual 
agreement  must  exist  between  the  parties  concerned, 
as  the  basis  of  a  legally  binding  contract  between  them. 
Heretofore  we  have  assumed  in  each  case  that  the  con- 
sent of  the  parties  to  contract  was  real.  We  now  come 
to  examine  in  some  detail  what  constitutes  reality  of 


V 


I 


222  CONTEACTS 

consent,  in  order  that  the  contract  may  be  legally  bind- 
ing. 
^"  In  the  first  place,  it  is  said  that  the  consent  of  one 

t  of  the  parties  may  not  be  real  because  it  is  given  under 

^-  some  mistake  of  fact.    If  one  of  the  parties  is  mistaken 

as  to  the  nature  of  the  contract  he  makes  and  the  mis- 
take is  not  due  to  any  negligence  on  his  part,  his  con- 
sent to  that  contract  is  not  real  and  he  may  not  be 
held  upon  it.  If  he  thinks  that  he  is  signing  a  con- 
^  tract  of  guaranty  he  may  not  be  held  if  the  contract 

turns  out  to  be  a  bill  of  exchange.    In  practically  all 
such  cases,  however,  there  is  an  additional  element,  to- 
^  wit,  fraud  on  the  part  of  the  other  party.    In  the  Story 

^  Case,  the  conduct  of  Mr.  Vassermann  was  fraudulent, 

xj  Nevertheless,  aside  from  the  fraud,  the  consent  of  Mr. 

Jacobs  was  not  real,  because  he  was  mistaken  as  to  the 
nature  of  the  contract ;  and  the  mistake  was  not  caused 
by  any  negligence  on  his  part.  Therefore,  the  contract 
is  not  binding  upon  him. 


B.    Mistake  as  to  the  Person  With  Whom  the  Contract 

Is  Made 

BULING  I.AW 

Story  Case  Answer 

In  New  York  City,  there  were  a  number  of  persons 
by  the  name  of  Walter  Jones.  It  chanced  that  two 
persons  of  that  name  had  offices  in  the  same  building. 
Will  Davis,  of  Buffalo,  wrote  to  Walter  Jones  (No.  1) 
and  instructed  him  to  invest  $9,000  for  him.  The  letter 
went  to  Walter  Jones  (No.  2)  who  was  also  in  the  in- 
vesting business.  Jones  (No.  2)  secured  the  investment 
in  good  faith  and  communicated  the  fact  to  Davis. 


CONTRACTS  223 

Davis  had,  however,  learned  of  the  mistake  and  re- 
fused to  deal  with  Jones  (No.  2). 

Jones  (No.  2)  sued  him  for  breach  of  the  contract 
to  furnish  $9,000  for  the  investment.  Should  he  win 
the  suit! 


ETJLING  COURT  CASE 

Boulton  vs.  Jones,  Volume  2  Hurlstone  &  Norman, 
English  Reports,  Page  564. 

Boulton  had  been  foreman  and  manager  to  one 
Brocklehurst,  a  pipe  hose  manufacturer.  Jones,  the 
defendant  in  this  case,  had  dealt  frequently  with 
Brocklehurst  and  he  had  an  account  with  him.  On  the 
morning  of  the  13th  of  January,  1857,  Boulton  bought 
Brocklehurst 's  stock,  fixtures  and  business  and  paid 
for  them.  In  the  afternoon  of  the  same  day,  Jones 
sent  a  written  order,  addressed  to  Brocklehurst  for 
three  hundred  and  fifty  feet  of  hose.  It  was  furnished 
by  Boulton,  who,  later,  sent  a  bill  to  Jones  for  the 
same.  When  Jones  found  out  that  Brocklehurst  had 
sold  out  the  morning  before  he  made  this  order,  and 
that  Boulton  had  furnished  it  instead,  he  refused  to 
pay  for  it.  Thereupon,  Boulton  brought  this  action  to 
recover  for  the  hose. 

Jones  contended  that  he  was  not  liable,  since  he  had 
never  made  any  contract  with  Boulton ;  he  thought  that 
he  was  making  a  purchase  from  Brocklehurst  and  that 
he  never  intended  to  make  one  from  Boulton. 

Mr.  Pollock,  C.  B.,  said:  **It  is  a  rule  of  law,  that 
if  a  person  intends  to  contract  with  A,  B  cannot  give 
himself  any  rights  thereunder." 

Accordinglj^  judgment  was  given  for  Jones,  the  de- 
fendant in  this  action. 


224  CONTRACTS 

RULING  LAW 
Story  Case  Answer 

Heretofore,  it  has  been  stated  as  a  rule  of  law  that 
only  the  person  to  whom  an  offer  has  been  made  may 
accept  it.  It  follows  from  this  rule  that  if  an  offer  is 
made  to  Mr.  Brown,  Mr.  Jones  may  not  accept  it.  It 
is  equally  true  that  an  offer  to  one  Mr.  BroT\Ti  may  not 
be  accepted  by  another  Mr.  Brown.  In  such  a  case, 
there  is  no  real  consent  on  the  part  of  the  offeror 
to  deal  or  contract  with  the  second  Mr.  Brown.  It 
follows  that  the  second  Mr.  Jones,  in  the  Story  Case, 
has  no  contract  with  Mr.  Davis,  and  judgment  should 
be  given  for  Davis  in  the  suit. 


C.    Mistake  as  to  Thing  About  Which  the  Contract 

Is  Made 

(1)     As  to  Its  Existence 

STORY  CASE 

Mr.  Gerald  Candler,  who  lived  in  Chicago,  owned  a 
farm  in  the  state  of  Indiana.  He  was  the  owner  of  a 
fine  racing  horse,  which  he  kept  on  his  farm.  Mr.  Max- 
well, a  friend  of  Mr.  Candler,  had  often  requested  Mr. 
Candler  to  sell  the  horse  to  him.  At  length,  Mr.  Cand- 
ler agreed  to  sell  the  horse.  On  September  28  he 
notified  Mr.  Maxwell  that  he  would  sell  him  the  horse 
for  a  certain  price,  if  the  latter  still  wished  to  purchase 
at  that  price.  The  following  day,  Mr.  Maxwell  agreed 
to  purchase  the  horse  and  to  pay  for  him  within  thirty 
days  from  that  date.  It  appeared  that  the  horse  had 
died  on  the  27th  and  notice  of  this  fact  did  not  reach 
Mr.  Chandler  until  the  1st  of  October.  Mr.  Maxwell 
then  sued  Mr.  Candler  for  breach  of  his  contract  to  sell 
the  horse.    "What  should  be  the  decision  in  the  case? 


CONTRACTS  225 

BULING  COURT  CASE 

Gibson  vs.  Pelkie,  Volume  37  Michigan  Reports, 
Page  380. 

Pelkie  had  recovered  a  judgment  against  a  certain 
person,  but  was  unable  to  collect  the  same.  He,  there- 
fore, entered  into  an  agreement  with  Gibson,  by  the 
terms  of  which  Gibson  was  to  have  half  of  the  judg- 
ment, in  case  he  could  collect  it.  Gibson  then  set  out  to 
collect  the  judgment.  Before  he  had  made  any  progress 
the  Court,  which  rendered  the  judgment,  declared 
that  it  was  void.  Gibson  then  sued  Pelkie  for  damages 
for  a  breach  of  the  contract  for  failure  to  furnish  the 
judgment. 

Pelkie  contended:  That  he  was  not  liable,  because 
there  was  a  mutual  mistake  as  to  the  existence  of  the 
thing  concerning  which  they  had  contracted;  that  he 
thought  that  he  had  a  valid  judgment,  and  had  good 
reason  to  believe  that  he  had;  but  since  he  had  not, 
there  was  no  real  consent  between  the  parties. 

Mr.  Justice  Graves  said  in  the  course  of  his  opinion : 
**If  then  there  was  a  proceeding  which  was  meant  to 
be  a  judgment,  but  which  was  void,  there  was  nothing 
to  which  the  actual  bargaining  could  attach.  There 
was  no  subject  matter.  The  parties  supposed  there 
was  a  judgment,  and  negotiated  and  agreed  on  that 
basis,  but  there  was  none.  Where  they  assumed  there 
was  substance,  there  was  no  substance.  They  made 
no  contract  because  the  thing  they  supposed  to  exist, 
and  the  existence  of  which  was  indispensable  to  the 
institution  of  the  contract,  had  no  existence." 

Judgment  was,  therefore,  given  for  Pelkie  in  this 
action. 


226  CONTRACTS 

EULING  LAW 
Story  Case  Answer 

If  parties  contract  in  reference  to  subject  matter, 
which  they  believe  exists,  but  which  in  fact  does  not 
exist,  or  if  the  subject  matter  in  the  meantime  has  been 
destroyed  without  knowledge  to  either,  no  contract  re- 
sults. It  is  said  that  there  is  here  a  lack  of  mutual 
consent.  But  a  better  explanation  is  that  the  parties 
contracted  in  reference  to  a  certain  subject  matter,  and 
it  is  impliedly  agreed  that  the  contract  is  binding  only 
in  case  that  subject  matter  does  exist.  In  the  Story 
Case,  the  parties  contracted  in  reference  to  a  specific 
horse.  They  both  believed  that  the  horse  was  in  ex- 
istence when  they  entered  into  the  contract.  However, 
about  the  existence  of  the  horse  they  were  mistaken. 
Consequently,  no  contract  resulted,  and  Mr.  Maxwell 
cannot  recover  anything  from  Mr.  Candler. 


(2)     Mistake  as  to  Its  Identity 
STOEY  CASE 

McCormik,  a  dealer  in  sailing  boats,  had  two  sloops 
named  *' Queen.''  One  was  an  old  one  and  the  other 
was  a  new  one  of  the  latest  model.  He  sold  the  old 
one  to  H.  C.  Coar. 

Several  days  later,  F.  I.  Merill  advertised  in  the 
paper  for  a  good  sloop.  Coar  answered  the  advertise- 
ment saying  that  he  would  sell  the  sloop  "Queen", 
which  he  had  recently  purchased  from  McCormik.  He 
offered  her  for  sale  at  a  slightly  advanced  price. 

MeriU  knew  of  the  new  sloop  "Queen"  owned  by 
McCormik  but  he  did  not  know  of  the  old  one.  Conse- 
quently, he  accepted  the  offer  immediately.    When  he 


CONTRACTS  227 

found  out  that  it  was  not  the  one  he  had  in  mind  he 
refused  to  take  the  old  boat;  Coar  started  suit  for 
breach  of  contract.    Merill  defended  on  the  ground  of 
mistake. 
Is  the  defense  good? 

BULING  COUET  CASE 

Kyle  vs.  Kavanagh,  Volume  103  Massachusetts  Re- 
ports, Page  356;  Volume  4  American  Reports,  Page 
560. 

At  the  trial  of  this  case,  it  appeared  that  Kyle  exe- 
cuted and  gave  to  Kavanagh  the  following  written 
agreement : 

'*I  hereby  agree  to  sell  E.  Kavanagh,  four  lots 
of  land  in  Waltham,  on  Prospect  Street,  so  called, 
for  50  shares  of  Mitchell  granite  stock,  9,000 
shares  of  Revenue  Gold  stock,  also  $150  in  law- 
ful money  for  said  land." 

Kavanagh  looked  at  the  lots  which  he  supposed  were 
included  in  this  offer,  and  accepted  the  same.  There- 
after, Kyle  tendered  the  deed  to  four  lots  on  Prospect 
Street,  in  the  city  of  Waltham.  It  was  then  discovered 
that  there  were  two  Prospect  Streets  in  Waltham. 
Kyle  was  thinking  of  one  street  where  he  owned  the 
lots  and  Kavanagh  had  in  mind  lots  on  the  other  street, 
on  which  Kyle  owned  no  lots.  Under  the  circum- 
stances, Kavanagh  refused  to  accept  the  deeds  or 
transfer  the  stock  and  pay  the  money  as  agreed. 
Thereupon,  Kyle  brought  this  action  for  damages. 

Kavanagh  contended  that  no  contract  was  ever  made 
between  them,  because  one  was  thinking  of  one  thing, 
and  the  other  of  another.  Their  minds  never  really 
met  on  the  same  subject  matter. 


228  CONTEACTS 

Decision:  No  contract  results  from  an  agreement 
where  the  parties  are  laboring  under  a  mutual  mis- 
take as  to  the  identity  of  the  subject  matter,  concern- 
ing which  they  attempt  to  contract.  In  this  case,  if  the 
contention  of  Kavanagh  is  true,  he  was  thinking  of  lots 
in  one  place,  and  Kyle  was  offering  to  sell  him  lots  in 
another  place.  Both  thought  that  each  had  in  mind 
the  same  lots.  Since  they  did  not,  then  their  minds 
never  met,  and  no  contract  was  made. 

Mr.  Justice  Morton  said:  ''The  instructions  given 
were  correct  in  substance,  that :  If  the  defendant  was 
negotiating  for  one  thing  and  the  plaintiff  was  selling 
another  thing,  and  their  minds  did  not  agree  as  to  the 
subject  matter  of  the  sale,  there  would  be  no  contract 
by  which  the  defendant  would  be  bound,  though  there 
was  no  fraud  on  the  part  of  the  plaintiff.  This  ruling 
is  in  accordance  with  the  elementary  principles  of  the 
law  of  contracts. '* 

Judgment  was  given  for  Kavanagh. 

RULING  LAW 
Story  Case  Answer 

When  one  of  the  contracting  parties  thinks  that  he 
is  contracting  in  reference  to  one  thing,  and  the  other 
is  contracting  in  reference  to  another  thing,  obviously, 
the  parties  have  not  agreed  upon  anything  whatever. 
As  it  is  said,  their  minds  have  not  met  upon  a  common 
basis.  There  is  lack  of  real  consent  to  the  most  im- 
portant element  of  the  contract,  the  subject  matter. 
When  such  a  mutual  mistake  exists  between  the  par- 
ties as  to  the  identity  of  the  thing,  concerning  which 
they  attempt  to  contract,  no  binding  contract  results. 
In  the  Story  Case,  there  was  a  mutual  mistake  of  the 


CONTRACTS  229 

contracting  parties  as  to  the  subject  matter.  Because 
of  this  mutual  mistake,  there  was  no  real  consent,  and 
equally  there  was  no  contract.  Consequently,  the  de- 
fense of  Merill  is  good. 


(3)     Mistake  as  to  Quality 
STORY  CASE 

Howard  Cameron  had  a  cargo  of  mahogany  for  sale. 
He  thought  the  mahogany  was  of  the  very  best  grade 
and  he  priced  it  according  to  this  assumption,  although 
he  did  not  tell  any  prospective  buyer  that  it  was  of 
the  best  grade.  IngersoU  Bros,  inspected  the  cargo, 
and  concluded  that  it  was  the  best.  There  were  some 
negotiations  in  regard  to  the  price  and,  finally,  Inger- 
soU Bros,  bought  the  cargo  at  a  price  which  clearly 
indicated  that  they  thought  the  mahogany  was  the 
best. 

After  the  contract  of  sale  had  been  completed,  but 
before  the  price  had  been  paid,  IngersoU  Bros,  discov- 
ered that  the  mahogany  was  not  only  not  the  best  but 
that  it  was  not  even  a  good  grade.  They  refused  to 
pay  the  agreed  price  and,  when  sued  for  it  by  Cam- 
eron, set  up  the  mistake  as  to  quality  as  a  defense.  Is 
this  a  good  defense? 

EULING  COURT  CASE 

Wood  vs.  Boyton,  Volume  64  Wisconsin  Reports, 
Page  265 ;  Volume  54  American  Reports,  Page  610, 

The  plaintiff  in  this  action.  Wood,  found  a  small 
stone.  As  she  was  ignorant  of  its  value,  she  carried 
it  to  a  jewelry  shop,  owned  and  managed  by  Boji;on, 
the  defendant,  to  ascertain  its  actual  worth.     The 


230  CONTRACTS 

jeweler  was  unable  to  determine  immediately  the  value 
of  the  stone,  but  offered  her  a  dollar  for  it.  This,  she 
refused  and  carried  the  stone  away  with  her.  Some 
weeks  later  she  returned  and  said  that  she  was  willing 
to  sell  it  for  a  dollar.  He  paid  her  the  dollar  and  took 
the  stone.  Upon  further  investigation,  the  stone  was 
found  to  be  an  uncut  diamond  and  worth  at  least 
$700.  When  Wood  learned  of  this,  she  immediately 
demanded  the  return  of  the  stone,  and  offered  to  return 
the  dollar  to  Boynton.  He  refused  to  accept  this  offer. 
She  then  brought  suit  to  recover  the  stone  or  its  value. 

Wood  contended  that  there  was  a  mistake  as  to  the 
value  of  the  stone ;  and,  but  for  this  mistake,  she  would 
never  have  sold  it.  By  Boyton  it  was  insisted  that 
since  the  mistake  was  mutual,  both  as  to  the  nature  of 
the  stone  and  the  quality  or  value  of  it,  the  mistake 
did  not  affect  the  reality  of  their  consent  to  the  agree- 
ment. 

Decision  t  Where  the  parties  to  an  agreement  make 
a  mutual  mistake  as  to  the  quality  of  the  subject  mat- 
ter, this  mistake  does  not  render  their  consent  unreal. 
It  is  true  that  one  of  the  parties,  or  even  both  might 
not  make  the  same  contract,  had  they  known  all  the 
facts,  but  if  the  agreement  is  entered  into  fairly,  it  is 
binding,  even  though  they  are  seriously  mistaken  as  to 
the  value  or  the  quality  of  the  thing  concerning  which 
they  contract.  In  this  case,  it  appears  that  Boyton  was 
just  as  ignorant  of  the  quality  and  value  of  this  stone 
as  was  Wood.  Consequently,  the  contract  is  binding 
and  Wood  is  not  entitled  to  recover  the  stone  or  its 
value  from  Boyton. 

Judgment  was  given  for  Boyton. 


CONTRACTS  281 

ETJLINQ  LAW 
Story  Case  Answer 

A  mutual  mistake  of  the  parties  as  to  the  quality  of 
the  subject  matter  concerning  which  they  contract, 
does  not  affect  their  consent.  The  consent  is  real,  not- 
withstanding the  fact  that  they  are  mistaken.  If  one 
person  contracts  to  sell  something  to  another,  the  value 
of  which  is  unknown  to  him,  and  the  other,  who  is  like- 
wise mistaken  as  to  its  value,  contracts  to  purchase 
the  same,  a  binding  contract  results.  It  seems  some- 
what unfair  in  some  cases  that  one  of  the  parties 
should  be  benefited  by  such  a  transaction.  This  ap- 
parent unfairness  is  very  conspicuous  in  the  Court 
Case  of  Wood  vs.  Boyton.  On  the  other  hand,  when 
both  parties  are  mistaken  and  the  contract  is  fairly 
entered  into,  both  are  taking  chances.  It  is  as  likely 
that  one  as  the  other  will  suffer  a  loss.  Because  of 
this,  the  Courts  seem  to  think  it  the  better  rule  to  hold 
that  the  contract  is  binding.  In  the  Story  Case,  it  ap- 
pears that  both  parties  were  mistaken  as  to  the  quality 
of  the  m'ahogany.  Such  being  the  case,  the  contract 
is  binding,  notwithstanding  their  mistake  as  to  its 
value.  Therefore,  Cameron  may  recover  and  the  de- 
fense of  IngersoU  Brothers  is  not  good. 


2.     There  May  Be  Lack  of  Consent  Because  of 

Misrepresentation 

A.     Misrepresentation  Does  Not  Affect  Reality  of 

Consent  at  Law 

STORT  CASE 

John  Dixon  was  a  cotton  grower  in  southeastern 
Georgia.  After  he  had  had  his  cotton  ginned  and 
baled,  he  found  that  he  had  approximately  a  thousand 


232  CONTRACTS 

pounds  of  unginned  cotton  left.  As  this  was  scarcely 
sufficient  to  make  a  bale  of  ginned  cotton,  he  decided 
to  sell  it,  if  possible,  to  a  neighbor.  He  offered  it  to 
Mr.  Cross  for  three  cents  a  pound.  Mr.  Cross  inquired 
whether  any  of  this  cotton  had  been  picked  after 
frost.  Mr.  Dixon  replied  that  it  had  all  been  picked 
before  frost.  He  was  mistaken,  however;  for,  un- 
known to  him,  his  laborers  had  picked  about  a  hundred 
pounds  after  frost.  When  Mr.  Cross  discovered  this, 
he  refused  to  accept  the  cotton.  Mr.  Dixon  sued  for 
the  purchase  price  agreed  upon,  alleging  that  he  was 
innocent  of  any  misrepresentation.  What  should  be 
the  decision  of  the  court? 

RULING  COURT  CASE 

Bannerman  vs.  White,  Volume  10  Common  Bench 
Reports,  New  Series,  Page  860. 

Bannerman,  a  grower  of  hops,  offered  to  sell  his 
whole  crop  of  a  certain  year  to  White.  Before  White 
really  considered  the  offer,  he  asked  Bannerman  if  any 
sulphur  had  been  used  upon  the  growing  crop,  saying 
that  if  such  were  the  case,  he  would  not  even  consider 
the  purchase.  White  replied  that  no  sulphur  had  been 
used.  It  appeared,  however,  that  sulphur  had  been 
used  as  an  experiment  on  five  acres  out  of  three  hun- 
dred acres,  which  constituted  his  crop.  The  hops  from 
that  five  acres  had  been  harvested  and  mixed  with  the 
hops  from  the  remaining  number  of  acres.  When  he 
was  asked  the  foregoing  question,  Bannerman  had 
either  forgotten  about  this,  or  did  not  think  that  it 
was  sufficiently  important  to  mention.  When  White 
discovered  that  sulphur  had  been  used  on  five  acres, 
and  the  hops  from  this  tract  had  been  mixed  with  the 
remainder,  he  refused  to  accept  the  hops.    It  appeared 


CONTRACTS  233 

that  Bannerman  made  this  representation  innocently 
and  without  any  intention  to  defraud  White.  So  he 
brought  this  action  to  recover  the  price  agreed  upon 
for  the  hops. 

White  contended  that  he  was  not  liable,  because  the 
representation,  though  innocently  made,  was  really  a 
condition  of  the  contract,  and  not  having  been  per- 
formed or  fulfilled,  he  was  discharged  from  any  obli- 
gation under  their  agreement. 

Decision :  As  a  general  rule,  an  innocent  misrepre- 
sentation does  not  affect  the  reality  of  consent  of  the 
contracting  parties.  But,  if  the  fact  misrepresented  is 
very  material  or  important,  it  may  be  considered  as  a 
condition  upon  which  the  parties  contracted;  and  un- 
less that  condition  is  complied  with,  the  injured  party 
is  entitled  to  be  discharged  from  his  contract.  In  this 
case,  the  Court  came  to  the  conclusion  that  the  fact  that 
no  sulphur  had  been  used  was  a  condition  upon  which 
the  parties  contracted.  Since  it  appeared  that  sulphur 
had  been  used,  White  was  discharged  from  any  obli- 
gation under  the  contract. 

Mr.  Chief  Justice  Erie,  who  delivered  the  opinion 
of  the  Court,  said  in  part : 

"We  avoid  the  term  warranty  because  it  is  used  in 
two  senses,  and  the  term  condition  because  the  question 
is  whether  that  term  is  applicable.  Then  the  effect  is 
that  the  defendant,  White,  required,  and  that  the  plain- 
tiff, Bannerman,  gave,  his  assurance  that  no  sulphur 
had  been  used.  This  assurance  was  a  preliminary 
stipulation ;  and,  if  it  had  not  been  given,  the  defend- 
ant would  not  have  gone  on  vnth  the  treaty  which  re- 
sulted in  the  sale.  In  this  sense,  it  was  the  condition 
upon  which  the  defendant  contracted,  and  it  would  be 


234  CONTRACTS 

contrary  to  the  intention  expressed  by  this  stipulation 
that  the  contract  should  remain  valid  if  sulphur  had 
been  used. ' ' 

Judgment  was  given  for  White. 

ETJLING  LAW 

Story  Case  Answer 

The  general  rule  is  that  an  innocent  misrepresenta- 
tion does  not  effect  the  reality  of  the  consent  of  the 
parties  to  a  contract.  But  a  representation  may  be- 
come a  part  of  the  contract  as  a  condition  or  warranty. 
If  the  latter  is  the  case,  and  the  condition  is  not  per- 
formed, or  the  warranty  is  broken,  then  the  other 
party  is  discharged  from  any  obligation  mider  the 
contract.  It  is  in  every  case  of  this  kind  a  matter  of 
construction  to  say  whether  the  representation  is  a 
part  of  the  contract  as  a  condition.  If  it  is  concluded 
that  it  is  not  a  condition,  forming  a  part  of  the  con- 
tract, then  it  has  no  effect  at  all.  If,  on  the  other  hand, 
it  is  found  that  it  was  a  condition,  forming  a  material 
part  of  the  contract,  the  contract  may  be  avoided.  In 
the  Story  Case,  Mr.  Cross  expressly  requested  inform- 
ation whether  the  cotton  in  question  had  been  picked 
before  frost.  A  reasonable  conclusion  would  be  that  he 
intended  to  contract  only  on  that  condition.  Some  of 
the  cotton,  in  fact,  having  been  picked  after  frost,  he 
is  relieved  of  any  liability  upon  the  contract. 


B.    Misrepresentation  in  Land  Contracts 
STORY  CASE 

Mr.  Lyle  owned  a  tract  of  land  known  as  Blackacre. 
Upon  the  marriage  of  his  son,  James,  he  made  a  con- 
veyance of  this  tract  to  him.  At  that  time  he  told  his 


CONTRACTS  235 

son  that  Blackacre  contained  276  acres  of  land.  James 
lived  upon  the  tract  for  several  years,  but  took  no  steps 
to  ascertain  just  how  many  acres  the  tract  contained. 
He  then  moved  to  the  city.  After  working  there  for 
several  years,  he  decided  to  go  in  business  for  him- 
self. In  order  to  raise  the  necessary  capital  he  ad- 
vertised Blackacre  for  sale.  Mr.  Shull  saw  the  ad- 
vertisement and  interviewed  James  Lyle.  Lyle  said 
that  the  tract  contained  276  acres,  and  that  he  was  will- 
ing to  take  $3,000  for  the  whole  of  it.  An  agreement 
was  made  in  writing,  by  which  James  Lyle  agreed  to 
sell,  and  Mr.  Shull  agreed  to  buy  Blackacre  on  the 
terms  just  mentioned.  After  the  deed  was  made  and 
delivered  and  the  part  of  the  purchase  price  had  been 
paid,  Mr.  Shull  directed  a  surveyor  to  ascertain  the 
number  of  acres  in  the  tract.  It  was  found  that  the 
tract  contained  only  two  hundred  and  forty  acres.  Mr. 
Shull  then  filed  a  bill,  asking  that  the  transaction  be 
set  aside  because  of  this  misrepresentation.  James 
Lyle  contended  that  it  should  not  be  set  aside,  because 
the  misrepresentation  was  innocently  made.  Should 
the  transaction  be  set  aside  ? 

BUUNO  OOXJBT  CASE 

Norman  Burr  vs.  Caleb  Benedict,  Volume  99  Massa- 
chusetts Reports,  Page  463. 

Caleb  Benedict  was  the  owner  of  certain  land,  con- 
cerning which  he  apparently  knew  very  little.  He  of- 
fered to  sell  it  to  Norman  Burr.  The  latter  was  un- 
able to  make  a  visit  to  the  land,  but  desired  some  in- 
formation concerning  it.  Benedict  then  gave  him  "  in- 
formation'^  such  as  it  was.  Benedict  represented  that 
the  land  was  in  the  town  of  Sheffield.    As  a  matter  of 


236  CONTEACTS 

fact,  it  was  in  the  town  of  Great  Barrington.  He  fur- 
ther informed  Burr  that  it  was  all  dry  land,  and  almost 
all  of  it  accessible  to  teams  and  that  it  could  cut  from 
fifteen  to  eighteen  cords  of  wood  to  the  acre.  All  the 
statements  were  inaccurate.  The  land  included  a  very 
large  swamp ;  very  little  of  the  land  was  accessible  by 
teams ;  and  the  average  number  of  cords  which  could 
be  cut  from  the  land  was  about  twelve.  He  also  stated 
that  six  acres  of  the  land  was  cleared,  and  ready  for 
cultivation  and  faced  a  public  road.  He,  himself, 
thought  this  was  true,  but  this  six  acre  tract  of  cleared 
land,  which  faced  the  road,  did  not  belong  to  him. 
Norman  Burr  relied  upon  these  statements  and  pur- 
chased the  land.  When  he  investigated,  he  found  the 
situation  to  be  as  stated  above.  He,  thereupon, 
brought  a  bill  in  equity  to  have  the  transaction  set 
aside. 

Benedict  contended  that  Burrs'  prayer  for  cancella- 
tion of  the  contract  should  be  denied.  He  admitted 
that  he  had  seriously  misrepresented  the  situation,  but 
contended  that,  since  he  was  innocent  in  doing  so,  there 
was  no  ground  for  cancellation  of  the  contract. 

Decision:  Misrepresentation  of  a  material  char- 
acter made  by  one  person  to  another  in  entering  into 
a  contract,  renders  the  contract  voidable,  however  in- 
nocently the  misrepresentations  were  made.  In  such  a 
case,  it  cannot  be  said  that  the  other  party  ever  really 
consented  to  such  an  agreement.  In  this  case,  no  doubt 
Benedict  had  no  intention  of  misinforming  Burr  as  to 
the  land ;  but  his  statements  did  mislead  him  as  to  very 
material  facts.  The  consent  of  Burr  to  such  a  con- 
tract can  in  no  wise  be  said  to  be  real.  Therefore,  a 
Court  of  Equity  will  cancel  such  an  agreement. 


CONTEACTS  237 

Mr.  Justice  Foster  very  clearly  states  the  principles 
involved:  "There  can  be  no  doubt  of  the  full  equity 
jurisdiction  of  this  Court  to  set  aside  a  conveyance  of 
land  on  the  grounds  of  mistake,  where  the  vendor  has 
undertaken  to  sell  something  which  he  did  not  own, 
and  the  estate  embraced  in  the  deed,  although  owned 
by  him,  is  not  that  which  the  vendee  intended  to  buy 
and  supposed  that  he  was  obtaining  by  the  conveyance. 
In  such  a  case,  the  equity  for  a  rescission  of  the  tran- 
saction does  not  depend  upon  intentional  fraud  on  the 
part  of  the  grantor ;  and  it  is  by  no  means  limited  to 
cases  in  which  an  action  for  deceit  would  lie  at  com- 
mon law.  Relief  is  granted  upon  the  ground  that  it 
would  be  inconscientious  to  oblige  a  man,  who  has  not 
been  himself  negligent  or  in  fault,  to  adhere  to  his  bar- 
gain, and  to  retain  property  where  he  was  induced  by 
a  misapprehension  as  to  the  material  and  essential 
circumstances,  which  he  was  led  into  by  the  conduct 
of  the  other  party.  ^' 

Accordingly,  judgment  was  given  for  Norman  Burr. 

RULING  LAW 
Story  Case  Answer 

It  has  just  been  stated  that,  as  a  general  rule,  an  in- 
nocent misrepresentation  does  not  affect  the  validity 
of  a  contract.  But  it  was  also  seen  that  the  fact  rep- 
resented might  become  a  condition  upon  which  the 
parties  contract.  If  this  be  the  case  no  contract  is 
ever  made.  However,  there  are  certain  contracts  in 
which  it  is  held  that  every  innocent  misrepresentation 
does  affect  the  validity  of  a  contract,  and  entitles  the 
injured  party  to  have  the  contract  cancelled  or  set 
aside  in  a  court  of  equity.  Every  representation  is 
said  to  be  material.    This  is  true  of  contracts  to  sell 


238  CONTRACTS 

land.  In  such  a  case,  if  one  party,  however,  innocently, 
makes  a  misrepresentation  as  to  the  land,  this  will  give 
the  other  the  right  to  have  the  transaction  set  aside. 
In  the  Story  Case,  the  statement  by  James  Lyle  that 
the  land  contained  276  acres  was  a  material  fact  in  the 
agreement,  and  although  it  was  innocently  made,  it 
entitles  Mr.  Shull  to  have  the  transaction  set  aside. 


C.     When  Made  by  One  Who  Stands  in  a 

Confidential  Relation 

STORY  CASE 

Jacob  Wise  was  the  guardian  of  Edward  Hilton, 
who  had  a  substantial  inheritance.  After  Hilton  be- 
came twenty-one  and  while  Wise  was  still  acting  as 
guardian,  Hilton  offered  to  purchase  a  riding  horse 
belonging  to  Wise.  The  latter  was  not  eager  to  sell, 
but  nevertheless,  negotiated  with  his  ward ;  finally,  an 
agreement  was  reached,  and  Hilton  received  posses- 
sion of  the  horse. 

During  the  negotiation,  Hilton  inquired  of  Wise  as 
to  the  age  of  the  animal,  and  Wise  answered  in  good 
faith,  that  it  was  five  years  old.  Hilton  replied  to  this, 
**Well,  five  or  six  years  is  a  good  age." 

Two  weeks  after  the  sale,  when  Wise  demanded  his 
purchase  money,  Hilton  refused  to  pay  on  the  ground 
that  the  horse  was  six  years  old,  and  not  five  as  Wise 
represented.  Wise  contended  that  this  was  an  imma- 
terial representation  made  in  good  faith,  and  there- 
fore not  a  good  defense.    Is  this  correct  ? 

EUIiING  COURT  CASE 

Miles  vs.  Erwin,  Volume  1  McCord's  Chancery  Re- 
ports {South  Carolina),  Page  524. 


CONTRACTS  239 

Lyle  Harper  and  others  claimed  an  interest  in  some 
land  owned,  as  a  matter  of  fact,  by  Miles.  Harper, 
relying  upon  his  claim,  was  trespassing  upon  the 
property ;  Miles  went  to  Erwin,  his  lawyer,  related  the 
facts  in  the  matter,  and  asked  him  to  proceed  in  any 
way  necessary  to  free  his  land  from  these  claims.  Er- 
win investigated,  and  then  told  Miles  that  the  claim  of 
Harper  was  without  any  foundation,  but  that  he  was 
uncertain  as  to  the  claims  of  the  other  parties.  He 
brought  a  bill  in  court  and  eliminated  the  claim  of 
Harper.  Harper  took  an  appeal,  and  while  it  was  pend- 
ing, one  Corless  applied  to  Erwin,  the  lawyer,  with  a 
view  of  purchasing  the  land  from  his  client.  He  told 
Erwin  that  the  land  might  be  procured  for  a  very  rea- 
sonable sum  if  he  "would  throw  cold  water  on  Miles' 
title. ' '  Thereupon,  Erwin  told  Miles  that  his  title  was 
very  doubtful  because  of  the  claims  of  these  other  per- 
sons. Because  of  this  Miles  sold  the  land  to  Corless 
for  the  sum  of  $300.  Later,  Corless  sold  it  again  for 
$2,500  and  gave  Erwin  $900.  This  w^as  a  suit  brought 
by  Miles  .to  recover  this  money  from  his  lawyer,  Er- 
win, on  the  ground  that  Erwin  had  made  false  repre- 
sentations. 

Erwin  claimed  that  the  representations  were  not 
false.  He  insisted  that  he  did  really  believe  that  Miles' 
title  was  doubtful.  Miles,  however,  contended  that  he 
should  have  been  told  all  the  facts,  especially  as  to  the 
desire  of  Corless  to  purchase  the  property. 

Decision :  The  relation  between  an  attorney  and  his 
client  is  a  highly  confidential  one ;  and  the  law  demands 
of  the  attorney  the  highest  degree  of  faith  in  his  deal- 
ings A\ith  the  client.  It  is  true  that  the  title  of  Miles 
was  doubtful ;  but  the  statements  of  Erwin,  under  the 


240  CONTRACTS 

circumstances,  were  deceptive ;  he  should  have  told  him 
that  Corless,  notwithstanding  the  doubtful  title,  was 
willing  to  purchase  the  land  for  a  far  higher  price  than 
he  actually  paid  for  it. 

Mr.  Justice  Johnson  said  in  part:  **The  policy  of 
the  law  is  clearly  opposed  to  contracts  between  client 
and  attorney  in  relation  to  property  in  litigation  and 
of  which  the  latter  has  charge.  The  value  of  the  prop- 
erty, we  know,  depends  almost  exclusively  on  the  cer- 
tainty of  title ;  and  from  the  nature  of  his  profession, 
the  attorney  is  supposed  to  be  more  competent  to  judge 
of  it  than  the  client.  To  discharge  the  duties  which 
that  relation  imposes,  he  must  acquaint  his  client  with 
all  the  information  he  possesses  on  the  subject  mat- 
ter.'' 

Because  the  utmost  good  faith  must  be  exercised  by 
one  in  confidential  relation  with  another,  the  law  will 
not  permit  the  fiduciary  to  gain  at  the  expense  of  his 
ward  or  client.  If  the  trusted  one  does  gain,  the  law 
will  presume  that  he  has  acted  in  bad  faith  and  will 
compel  him  to  reimburse  the  one  who  has  trusted  him. 

Judgment  was  given  for  Miles. 

EULING  LAW 
Story  Case  Answer 

Errors  in  contracts  made  between  persons  standing 
in  a  confidential  relation  illustrate  another  exception 
to  the  general  rule  that  an  innocent  misrepresentation 
does  not  aifect  the  validity  of  a  contract.  A  confiden- 
tial relation  exists,  where  one  person  has  a  legal  or  a 
natural  right  to  control  another,  and  is  under  a  legal 
or  natural  duty  to  look  after  the  interests  of  that  other. 
Instances  of  this  kind  are :  the  relation  between  prin- 
cipal and  agent;  the  relation  between  guardian  and 


CONTEACTS  241 

ward;  the  relation  between  father  and  son,  or  parent 
and  child.  In  these  relations,  the  parties  do  not  stand 
on  an  eqnal  basis.  The  one  who  has  control  and  is 
under  a  duty  to  look  after  the  interests  of  the  other 
has  a  decided  advantage,  and  can  easily  benefit  by  the 
other's  more  or  less  helpless,  and  dependent  condi- 
tion. Because  of  this,  the  law  wisely  says  that  the 
person  having  this  legal  or  natural  advantage  must 
exercise  the  highest  degree  of  faith  in  dealing  with  the 
other.  Consequently,  any  misrepresentation,  however 
innocent,  or  a  non-disclosure  of  material  facts,  will  give 
the  dependent  party  the  right  to  set  aside  the  contract, 
be  it  a  contract  concerning  land  or  concerning  personal 
property,  or  any  other  kind  of  contract. 

It  follows  from  what  has  been  said,  that  Edward 
Hilton,  in  the  Story  Case,  has  a  good  defense  and  is 
entitled  to  have  the  contract  set  aside.  Of  course  in 
this  case.  Wise  can  demand  a  return  of  the  horse. 


D.     When  Made  Carelessly,  Misrepresentations  Amount 

to  Fraud 
STOSY  CASE 

The  Hepp  Hardware  Co.  sold  a  binder  to  F.  E. 
Small,  a  farmer.  The  company  said  that  it  would  bind 
over  50  acres  per  day.  On  the  faith  of  this  representa- 
tion Small  purchased  the  binder.  Before  paying  for 
it,  he  discovered  that  the  Hepp  Company,  although  act- 
ing in  good  faith,  were  mistaken  and  that  the  binder 
could  at  most  work  not  more  than  40  acres  a  day.  He 
refused  to  accept  and  pay  for  the  binder  and  was  sued 
for  the  price  by  the  company. 

He  defends  on  the  ground  that  the  company  misrep- 
resented the  capacity  of  the  binder  and,  if  it  had  not 


242  CONTEACTS 

been  for  the  misrepresentation,  he  would  not  have  con- 
tracted to  buy  it.  The  company  answered,  that  the 
statement  was  made  in  good  faith.  He  replied  that  the 
company  should  have  known  better  and  that,  with  a 
little  investigation,  the  company  could  have  learned 
that  the  capacity  was  much  less  than  represented. 
Which  party  has  the  better  case  ? 

EUI.ING  COURT  CASE 

Henry  Peck  vs  William  Derby,  Law  Reports,  Vol- 
ume 14  Appeal  Cases  (English),  Page  337. 

By  the  English  Parliament,  a  special  act  was  passed 
incorporating  a  tram  company.  This  act  provided  that 
the  vehicles  might  be  moved  by  animal  power,  and, 
with  the  consent  of  the  Board  of  Trade,  steam  power 
might  be  used.  William  Derby,  a  director  of  the  com- 
pany, issued  a  prospectus  of  the  company  containing 
a  statement  that  by  a  special  act  of  parliament  the 
company  had  the  right  to  use  steam  power  instead  of 
horses.  Henry  Peck  bought  shares  in  the  company, 
in  reliance  upon  the  statement  that  steam  power  was 
to  be  used.  The  Board  of  Trade  afterwards,  when  ap- 
plied to  for  the  privilege  provided  in  the  act,  refused 
to  grant  it  to  the  company.  The  company,  therefore, 
was  unsuccessful  and  was  dissolved.  Thereupon, 
Henry  Peck  brought  this  action  for  damages.  He 
claimed  that  the  statement  of  the  director,  William 
Derby,  was  so  carelessly  made,  that  it  amounted  to 
fraud. 

Derby  contended  that  it  was  not  fraudulent,  because 
it  was  an  innocent  misrepresentation. 

Decision :  A  false  representation  amounts  to  fraud 
when  it  is  made  by  one  in  a  reckless  manner  without 


CONTRACTS  243 

regard  to  the  tmth  or  untruth  of  the  statement.  In 
this  case,  the  representation  was  partially  false,  but  it 
was  not  shown  that  Derby  made  it  in  such  a  reckless 
manner  that  it  amounted  to  fraud* 

Lord  Bramwell  said :  '  *  Cotton,  L.  J.,  says  the  law  is, 
that  where  a  man  makes  a  statement  to  be  acted  on  by 
others  which  is  false,  and  which  is  known  by  him  to  be 
false,  or  is  made  by  him  recklessly,  or  without  care 
whether  it  is  true  or  false,  that  is,  without  any  reason- 
able ground  for  believing  it  to  be  true,  he  is  liable  for 
deceit.*' 

A  man  who  makes  a  statement  without  care  and  re- 
gard for  its  truth  or  falsity  commits  a  fraud.  It  is 
not  proven  that  this  is  the  situation  in  this  case. 

Judgment  was  given  for  William  Derby. 

ETJUNG  LAW 
Story  Case  Answer 

Hereafter,  it  will  be  seen  that  the  consequences  which 
follow  fi:om  fraudulent  misrepresentation  are  differ- 
ent from  the  consequences  which  arise  out  of  more 
innocent  misrepresentations.  It  may  be  stated  that 
when  a  representation  is  made  by  a  person,  without 
regard  for  its  truthfulness  or  untruthfulness,  or  is 
made  recklessly  by  that  person,  without  care  for  its 
truth  or  falsity  the  misrepresentation  becomes  fraud- 
ulent. In  the  Story  Case,  whether  the  misrepresenta- 
tion made  by  Hepp  Hardware  Company  was  fraud- 
ulent, depends  upon  whether  it  was  made  recklessly 
without  regard  to  its  truth  or  falsity;  if  it  was  so  made, 
it  amounts  to  fraud.  The  fact  that  slight  investiga- 
tion on  their  part  would  have  revealed  to  them  the 
incapacity  of  the  machine  to  do  the  work  they  claimed 


244  CONTRACTS 

for  it,  probably  amounts  to  a  disregard  of  the  truth 
or  a  falsity  of  their  statements.  Judgment  should  be 
given  for  Small  on  this  theory. 


3.     There  May  Be  Lack  of  Consideration  Because  of  Fraud 

A.    There  Axe  Five  Characteristics  Essential  to  Fraud 

(1)     There  Must  Be  a  Misrepresentation  of  Fact 

STORY  CASE 

J.  Swan,  a  promoter,  in  inducing  Frank  Black  to  in- 
vest in  some  Florida  land,  said  that  the  investment  in 
his  opinion  would  surely  make  one  hundred  per  cent 
in  a  couple  of  years.  At  the  end  of  three  years  the 
land  had  decreased  in  value  and  it  was  certain  that  it 
would  never  be  worth  one-half  of  what  was  paid.  Black 
then  claimed  that  the  contract  was  induced  by  fraud 
and  sued  Swan  for  $2,000,  the  amount  that  Black  had 
invested. 

Swan  defended  on  the  ground  that  no  fact  was  mis- 
represented to  Black.  The  statement  that  the  invest- 
ment would  make  great  profit  was  only  a  statement  of 
opinion.    Do  you  think  that  the  defense  is  good? 

RULING  COURT  CASE 

Gordon  vs.  Parmelee,  Volume  2  Allen  Reports  {Mas- 
sachusetts),  Page  212. 

Parmelee  visited  Gordon  with  a  view  to  buying  his 
land,  in  case  it  was  suited  to  his  purpose.  He  stated 
to  Gordon  that  he  desired  to  buy  land  which  was  suit- 
able for  stock-raising.  Gordon  assured  him  that  the 
land  which  he  owned  was  most  excellent  for  that  pur- 
pose. Parmelee  was  unable  to  tell  much  about  the  land 
because  it  was  winter  time,  and  the  ground  was  covered 


CONTRACTS  245 

with  snow.  Relying  on  the  statements  of  Gordon,  how- 
ever, he  purchased  the  land,  and  gave  his  note  for  the 
payment.  The  following  year,  Parmelee  learned  that 
the  land  was  not  at  all  suitable  for  stock  raising  be- 
cause the  soil  was  too  poor.  He  refused  to  pay  the 
note  when  it  became  due.  Gordon  then  brought  this 
suit  on  the  note. 

Parmelee  contended  that  the  note  was  not  binding 
upon  him  because  his  consent  was  gained  to  the  trans- 
action by  false  representations  as  to  material  facts. 
But  it  was  insisted  by  Gordon  that  his  statements  were 
not  of  fact  but  of  his  opinion. 

Mr.  Chief  Justice  Bigelow  delivered  the  opinion  of 
the  court:  **The  alleged  false  statements  concerning 
the  productivity  of  the  soil  and  its  capacity  to  furnish 
support  for  cattle  constitute  no  defense  to  the  notes. 
They  fall  within  that  class  of  affirmations,  which  al- 
though known  by  the  party  making  them  to  be  false, 
do  not  as  between  vendor  and  vendee  afford  any 
ground  for  a  claim  for  damages.  Affirmations  con- 
cerning the  value  of  land,  or  its  adaptability  to  a  par- 
ticular mode  of  culture,  or  the  capacity  of  the  soil  to 
produce  crops  or  support  cattle,  are,  after  all,  only 
expressions  of  opinion  or  estimates  founded  on  judg- 
ment about  which  the  best  of  men  might  differ  ma- 
terially.'* 

Accordingly,  judgment  was  given  for  Gordon  in  this 
action. 

EUUNG  LAW 
Story  Case  Answer 

If  a  person's  consent  to  a  contract  is  procured  by 
fraud  or  fraudulent  means,  it  is  clear  that  the  consent 
of  such  person  is  not  real.    It  now  becomes  necessary 


246  CONTRACTS 

to  see  jnst  what  constitutes  fraud  which  renders  con- 
tractual consent  unreal.  In  the  first  place,  it  is  nec- 
essary that  there  should  be  a  false  representation  of 
an  existing  or  a  past  fact.  A  representation  of  one's 
opinion,  belief,  hope  or  expectation,  cannot  be  made 
the  basis  of  fraud.  In  the  Court  Case  of  Gordon  vs. 
Parmelee,  Gordon  stated  that  the  land  was  suited  for 
a  certain  purpose.  This  was  a  mere  expression  of 
opinion  on  his  part;  and,  although  his  opinion  might 
have  been  ungrounded,  nevertheless,  it  cannot  be 
made  the  basis  of  fraud.  Thus,  in  the  Story  Case, 
the  statement  of  Swan  that  the  value  of  the  land  would 
increase  rapidly  in  value,  was  a  mere  expression  of 
opinion  or  expectation,  and  did  not  constitute  a 
fraud.  Consequently,  judgment  in  that  case  should  be 
given  for  Swan. 


(2)    There  Must  Be  a  Knowledge  of  the  Falsity  of  the 
Wrong-doer 
STOBY  CASE 

On  January  4,  1915,  the  five  directors  of  the 
Springfield  First  Trust  Bank,  including  Herbert 
Keene,  met  in  annual  directors'  meeting  to  consider  the 
affairs  of  the  bank,  and  to  sign  ofiicial  reports.  The 
president  of  the  bank,  Frank  Jarman,  had  prepared  a 
statement,  showing  the  status  of  the  bank.  He  re- 
quested the  directors  to  sign  this  for  the  purpose  of 
printing  in  a  prospectus.  It  was  their  intention  to 
circulate  this  among  persons  who  were  interested  in 
buying  the  stock  of  the  bank.  Keene  asked  the  presi- 
dent, Mr.  Jarman,  this  question,  "Well,  Jarman,  if 
this  report  is  true,  we  will  sign  it  without  looking  into 
it.    We  will  take  your  word  for  it.    Is  it  rights'    Jar- 


CONTRACTS  247 

man  answered  that  the  report  was  tme,  and  the  di- 
rectors signed  it.  The  report  was  printed,  and  in  re- 
liance thereon,  Emory  Gray  purchased  a  block  of  the 
stock.  Subsequently,  it  was  learned  that  the  president, 
Jarman,  was  in  default  with  the  bank  and  that  the 
report  was  not  true.  As  a  result.  Gray  lost  his  invest- 
ment. He  brought  suit  against  the  directors  person- 
ally, on  the  ground  that  they  had  committed  fraud  in 
signing  the  statement.  The  directors  put  in  defense 
that  fraud  did  not  exist  on  their  part  because  they  did 
not  have  knowledge  of  the  false  statement  of  facts. 
Is  this  a  good  defense! 

BUUNG  COnST  CASE 

Helps  vs.  Stimson,  Volume  9  Colorado  Reports. 
Page  33. 

William  Stimson  was  the  owner  of  mining  land.  He 
was  applied  to  by  Helps  for  a  lease  of  this  land.  Stim- 
son represented  that  the  boundary  lines  of  his  mining 
claim  extended  to  certain  points.  Helps,  thereupon, 
agreed  to  take  a  lease  of  the  land  for  a  period  of  four 
years.  He  immediately  set  to  work  to  put  the  land  in 
readiness  for  mining.  After  he  had  worked  for  several 
weeks  in  a  certain  part  of  the  claim,  he  was  notified 
by  the  Marshall  Coal  Mining  Company  to  cease  work 
at  that  point,  because  he  was  on  its  land.  Helps, 
thereupon,  brought  this  action  against  Stimson  for 
damages. 

Stimson  contended  that  he  should  not  be  held  liable, 
since  it  was  not  shown  that  he  knowingly  made  these 
misrepresentations. 

Mr.  Justice  Elbert  said  in  part:  "The  law  holds  a 
contracting  party  liable  as  for  a  fraud  on  his  express 


248  CONTRACTS 

representation  concerning  facts  material  to  the  trans- 
astion — the  truth  of  which  he  assumes  to  know,  and 
the  truth  of  which  is  not  known  to  the  other  contract- 
ing party — when  the  representations  were  false,  and 
the  other  party  relying  upon  them,  has  been  misled  to 
his  injury," 

It  is  not  necessary,  in  order  to  constitute  a  fraud, 
that  the  party  who  makes  a  false  representation  should 
know  it  to  be  false.  He  who  makes  a  representation  as 
of  his  own  knowledge,  not  knowing  whether  it  is  true 
or  false  and  it  is  in  fact  untrue,  is  guilty  of  fraud  as 
much  as  if  he  knew  it  to  be  untrue. 

Judgment  was  given  for  Helps  in  this  action. 

RTJLINa  LAW 
Story  Case  Answer 

When  a  person  makes  a  false  representation,  which 
he  knows  to  be  false,  a  basis  for  fraud  is  clearly  con- 
stituted; this  renders  the  consent  of  the  other  party 
to  the  contract,  imreal.  If  a  party  makes  a  representa- 
tion recklessly,  in  that  he  does  not  know  whether  it  is 
true  or  false  and  does  not  care,  such  a  statement  like- 
wise is  fraudulent.  Furthermore,  if  a  person  makes  a 
false  representation  of  a  fact,  which  could  be  verified 
by  investigation,  it  is  fraudulent,  although  he  honestly 
believed  that  it  was  true.  The  fraud  here  consists  in 
making  a  false  statement  concerning  his  own  knowl- 
edge. In  the  Story  Case,  the  directors  committed  fraud. 
When  the  statement  was  issued,  they  affirmed  the  fact 
that  they  had  looked  into  the  affairs  of  the  Trust  Bank 
and  found  them  as  stated  to  their  own  knowledge  and 
belief.  It  was  not  true  that  they  had  investigated  or 
had  any  knowledge  of  their  own.  Therefore,  their 
defense  is  not  good. 


CONTKACTS  249 

(3)    There  Must  Be  Intention  to  Have  the  Party 
Rely  on  the  Untruth 
STOEY  CASE 

Zeke  Gilpin  tried  to  sell  his  standing  lumber  to  the 
Willis  Mills.  He  intentionally  represented  that  there 
were  500  acres  of  walnut  timber,  knowing  all  the  time 
that  there  were  only  375  acres.  The  Willis  Mills  were 
unable  to  accept  the  offer  but  they  told  the  Wayfield 
Lumber  Company  of  the  proposition,  and  repeated 
that  there  were  500  acres  of  walnut. 

On  the  next  day  the  Wayfield  Lumber  Company  ap- 
proached Gilpin  and,  on  the  strength  of  his  represen- 
tation to  the  Willis  Mills,  offered  him  a  price  which 
was  estimated  on  the  belief  that  there  were  500  acres 
of  walnut.  A  contract  was  closed,  but  before  paying 
the  price,  the  Wayfield  Lumber  Company  learned  that 
the  land  and  timber  were  not  as  represented,  and  they 
refused  to  pay  the  purchase  price,  alleging  fraud  on 
the  part  of  Gilpin. 

Gilpin  defended,  on  the  ground  that  the  representa- 
tion which  he  made  to  the  Willis  Mills  was  not  one  upon 
which  the  Wayfield  Company  had  any  right  to  rely.  Is 
this  true? 

RtJLINQ  COUET  CASE 

Stevens  vs.  Ludlum,  Volume  46  Minnesota  Reports, 
Page  417;  Volume  13  Lawyers'  Reports,  Annotated, 
Page  270. 

John  Ludlum  was  investigated  by  various  com- 
mercial agencies  as  to  his  property,  so  that 
the  agencies  could  make  some  estimate  of  his 
credit.  To  all  of  these  agencies  he  stated  that 
he  was  the  sole  proprietor  of  the  New  York  Pie  Com- 


250  CONTRACTS 

pany.  This  information  was  conveyed  by  one  of  these 
commercial  agencies  to  J.  W.  Stevens,  who,  in  reliance 
thereon,  extended  credit  to  John  Ludlum.  Ludlum 
never  paid  the  accounts.  It  developed,  as  a  matter  of 
fact,  that  he  was  not  the  owner  of  the  New  York  Pie 
Company,  as  he  had  represented.  It  seems  that  he  had 
no  interest  whatsoever  in  it.  Suit  was  brought  against 
him  for  damages,  caused  by  the  false  representations 
as  to  the  property  which  he  claimed  to  own. 

His  defense  consisted  in  the  fact  that  he  had  never 
made  these  representations  to  Stevens,  and,  therefore, 
Stevens  had  no  right  to  rely  upon  them. 

Decision:  A  person  who  makes  representation 
falsely  is  liable  only  to  those  to  whom  they  were  made, 
and  to  such  persons  as  might  reasonably  suppose  that 
they  had  the  right  to  rely  upon  the  representations.  It 
is  not  necessary  that  the  statements  should  be  made 
directly  to  the  person  who  relies  upon  them.  If  they 
are  made  to  one  person  who  is  to  communicate  them  to 
others,  the  person  who  causes  them  to  be  made  is  as 
liable  as  if  he  had  made  them  directly  to  the  person  in- 
jured. In  this  case,  Ludlum  made  the  misrepresenta- 
tions to  commercial  agencies,  knowing  that  they  would 
be  communicated  to  various  persons  in  various  parts 
of  the  country.  He  is  liable,  therefore,  to  any  such 
person. 

Mr.  Justice  Gilfillan  said:  "Representations  need 
not  be  made  directly  to  the  party  acting  on  them.  It  is 
enough  if  they  were  made  to  another  and  intended  or 
expected  to  be  communicated  by  the  representatives 
of  the  party  making  them  to  the  party  acting  on  them, 
for  him  to  rely  and  act  on.  The  representative  may 
be  intended  for  a  particular  individual  alone,  or  sev- 


CONTRACTS  251 

eral,  or  for  the  public,  or  for  any  one  of  a  particular 
class,  or  it  may  be  made  to  A  to  be  communicated  to 
B.  Anyone,  so  intended  by  the  party  making  the  rep- 
resentation, will  be  entitled  to  redress  against  him  by 
acting  upon  the  representation  to  his  damage.  If  one 
acts  on  a  representation,  not  made  to,  or  intended  for, 
him,  he  will  do  so  at  his  risk." 

Judgment  was  given  for  Stevens  in  this  action. 

EULING  LAW 
Story  Case  Answer 

There  must  be  an  intention  upon  the  part  of  the 
person  making  the  false  statement  of  fact  that  it  shall 
be  relied  upon  by  a  given  person  or  a  given  class  of 
persons.  If  another  person  relies  upon  the  statement 
and  is  injured,  he  cannot  recover  for  the  fraud. 

In  the  Story  Case,  the  statement  was  not  made  to 
Wayfield  Lumber  Company;  and  so  far  as  appears, 
Gilpin  did  not  intend  that  Willis  Mills  should  repeat 
his  statements  to  the  "Wayfield  Lumber  Company.  Such 
being  the  case,  the  lumber  company  had  no  right  to 
rely  upon  the  statements  and  they  may  be  held  for  the 
purchase  price. 


(4)    There  Must  Be  Actual  Reliance  on  the  Untruth 
STORY  CASE 

The  Ideal  Studios,  in  New  York  City,  had  for  sale 
paintings  by  old  masters.  They  had  a  Titian  which 
they  wished  very  much  to  sell,  because  it  kept 
a  large  amount  of  money  invested.  John  Schell, 
a  millionaire  art  collector,  came  to  the  studio 
in  search  for  a  Raphael.  The  manager  rep- 
resented  that   the    Titian    was    a    Raphael.     Schell 


252  CONTEACTS 

was  a  good  judge  of  paintings.  He  thought  that 
the  picture  was  not  a  Raphael  but  he  expressed  no 
opinion.  He  promised  that  he  would  return  the  next 
day  and  give  his  decision. 

In  the  afternoon  of  the  same  day,  Schell  consulted 
an  expert  and  learned  that  the  picture  was  a  Titian 
but  worth  as  much  as  was  asked  for  it.  The  next 
day  he  purchased  it.  Later,  he  regretted  the  purchase, 
and  in  two  months  told  the  manager  that  he  wanted 
his  money  returned,  because  the  picture  was  not  a 
Raphael  as  had  been  represented  to  him. 

The  manager  replied,  that  Schell  had  consulted  an 
expert  before  paying  for  the  picture ;  that  he  knew  all 
the  time  that  he  was  not  purchasing  a  Raphael  and  that 
therefore,  he  had  no  right  to  claim  fraud.  Schell 
thought  that  the  fact  that  he  had  not  relied  on  the 
false  representation  was  immaterial  and  that  he  could 
get  his  money.    He  brought  suit.    Can  he  recover? 

EULINO  COURT  CASE 

Mary  Wagner  vs.  National  Life  Insurance  Company, 
Volume  90  Federal  Reporter,  Page  395. 

The  husband  of  Mary  Wagner,  who  is  the  plaintiff 
in  this  action,  had  taken  out  insurance  on  his  life  in  the 
National  Life  Insurance  Company,  the  defendant  here- 
in. Being  in  need  of  money,  the  deceased  husband 
had  determined  to  surrender  his  policy,  secure 
the  cash  surrender  value,  and  take  out  a  new 
policy.  With  this  purpose  in  view,  he  had  made  a 
visit  to  the  local  agent  of  the  company.  When  he 
told  his  desire  and  intention,  the  agent  called  in 
the  company  physician,  who  made  a  physical  ex- 
amination of  Wagner.    The  examination  revealed  the 


CONTEACTS  253 

fact  that  "Wagner  was  then  in  a  perilous  condition.  His 
heart  was  very  weak,  and  the  doctor  knew  that  he 
would  live  only  a  few  days.  This  he  communicated 
to  the  agent.  The  agent  then  refused  to  grant  Wagner 
a  new  policy,  stating  that,  though  his  condition  was 
not  dangerous  and  that  death  would  not  result  imme- 
diately, yet  his  condition  was  such  that  the  company 
could  not  afford  to  write  him  any  insurance.  He  also 
advised  Wagner  not  to  surrender  the  policy  he  then 
had.  But  the  deceased  had  insisted  and  so  it  was  done. 
He  died  within  ten  days  after  the  policy  was  surren- 
dered. This  was  an  action  brought  by  Mary  Wagner, 
seeking  to  have  the  surrender  set  aside,  on  the  ground 
that  the  false  representations  of  the  agent  as  to  time 
of  death  had  been  the  cause  of  the  surrender.  She 
contended  that  if  her  husband  had  been  told  the  truth 
he  would  not  have  surrendered  the  policy. 

On  the  part  of  the  company  it  was  insisted,  that  he 
did  not  rely  upon  the  representations  made  by  the 
agent.  For,  if  the  agent  had  said  nothing — and  he 
was  under  no  duty  to  speak — the  deceased  would  have 
surrendered  the  policy  even  more  quickly.  It  was  in- 
sisted for  the  company  that  if  Wagner  had  relied  upon 
their  representations,  he  would  not  have  surrendered 
the  policy. 

Decision:  Unless  the  deceived  person  relies  upon 
the  misrepresentations  he  has  no  right  to  complain  of 
his  action.  In  this  case,  the  deceased  put  no  reliance 
in  the  untruth  told  to  him  by  the  agent  of  the  company. 
Consequently,  Mary  Wagner  cannot  complain  of  the 
fact  that  the  policy  was  surrendered. 

Mr.  Justice  Taft  said:  ''Again,  the  untrue  state- 
ments did  not  cause  the  surrender  of  the  policy.    It  is 


254  CONTEACTS 

apparent  that  Wagner  would  have  insisted  upon  sur- 
render if  nothing  had  been  said,  and  what  was  said, 
was  said  only  to  prevent  surrender,  and  that,  though 
the  physical  condition  of  Wagner  was  misrepresented, 
Wagner's  action  would  have  been  the  same  if  the  mis- 
statements had  been  omitted.  Therefore,  they  did  not 
cause  the  surrender  and  cannot  be  made  the  groimd 
for  setting  it  aside.  * ' 

Therefore,  judgment  was  given  for  the  company. 

EULING  LAW 
Story  Case  Answer 

The  representations,  however  false,  do  not  constitute 
fraud  unless  they  actually  deceive  the  person  who  is 
intended  to  be  misled  by  them.  If  a  person  knows  of 
the  false  representations  and  pays  no  attention  to 
them,  or  puts  no  reliance  in  them,  obviously  he  has  not 
been  deceived ;  and  he  has  not  been  defrauded.  Thus,  in 
the  Story  Case,  Schell  can  recover  nothing.  Before  he 
purchased  the  picture  in  question  he  was  well  aware 
that  it  was  not  the  picture  that  it  was  represented  to 
be.  Accordingly,  he  cannot  now  set  up  the  claim  that 
he  has  been  defrauded.  Judgment,  therefore,  should 
be  given  against  him. 


(6)   There  Must  Be  Loss  Suffered  From  the  Deception 
STOEY  CASE 

On  November  15,  1914,  George  Craft,  the  presi- 
dent of  the  Western  Car  Corporation,  represented  to 
George  Knight  that  the  stock  of  that  corporation  was 
worth  $75  a  share,  because  of  certain  contracts 
for    automobiles    then    in    possession    of    the    com- 


CONTRACTS  255 

pany.  In  reliance  on  this  statement,  Knight  agreed 
to  buy  one  hundred  shares  and  pay  for  them  on  Jan- 
uary 1,  1915.  As  a  matter  of  fact,  the  corporation 
did  not  have  the  automobile  contracts  at  the  time 
Knight  agreed  to  purchase  stock,  and  the  stock  had 
been  sold  as  low  as  fifty  dollars  a  share  the  day  after 
his  purchase.  During  the  month  of  December,  1914, 
the  Western  Car  Corporation  received  an  order  for 
one  thousand  war  trucks  from  the  English  Govern- 
ment and  the  company's  stock  immediately  quickened 
in  value  and  became  worth  as  much  as  Knight  agreed 
to  pay  for  it. 

But  he  learned  how  Craft  had  deceived  him  into  the 
purchase  of  the  stock,  and  on  January  1,  1915,  refused 
to  pay  for  his  shares,  claiming  fraud  on  the  part  of 
Craft.  The  latter  contended  there  was  no  fraud  since 
Knight  had  lost  nothing.    Is  this  correct  ? 

RULING  COURT  CASE 

Rosser  vs.  Bomar,  Volume  131  Alabama  Reports, 
Page  215 ;  Volume  31  Southern  Reporter,  Page  430. 

D.  E.  Rosser  held  a  certain  patented  article.  He  was 
attempting  to  sell  interests  therein  so  that  he  could 
raise  money  for  the  purpose  of  putting  the  patent  on 
the  market.  He  offered  to  sell  an  interest  to  R.  R. 
Bomar.  To  induce  him  to  buy,  he  represented  that  Joe 
Cathron  had  taken  a  share,  and  that  Bob  Smith  was 
going  to  do  the  same.  Both  men  were  well  known  and 
influential.  Bomar,  relying  upon  this  statement  of 
Rosser,  agreed  to  buy  an  interest,  and  gave  his  note  in 
payment.  When  the  note  became  due,  he  refused  to 
pay  it. 

He  claimed  that  he  was  not  liable  on  the  note  because 
neither  of  the  men  mentioned  had  taken,  nor  did  they 


256  CONTRACTS 

intend  to  take,  a  share  in  the  patent.  On  the  other  hand, 
Rosser  showed  that  men  of  equal  prominence  and  influ- 
ence had  taken  shares,  and  that  the  representation,  al- 
though false,  had  caused  no  damage  whatsoever  to 
Bomar. 

Decision:  Even  though  a  person  may  rely  upon 
misrepresentations  made  by  another,  unless  he  suffers 
some  damage  by  his  reliance  thereon,  he  cannot  re- 
cover anything  from  the  wrong-doer.  It  is  morally 
wrong  to  deceive  another  but,  unless  the  deceived  per- 
son suffers  damage  therefrom,  it  is  not  a  legal  wrong. 
In  this  case,  Bomar  was  deceived  as  to  the  men  who 
would  be  interested  in  the  patent;  but  it  was  not 
shown  that  he  had  or  would  suffer  any  damage  from 
the  deception.  Therefore,  he  had  no  right  to  complain, 
and  Rosser  is  entitled  to  recover  on  the  note. 

Mr.  Justice  Tyson  said:  ** Injury  or  damage  must 
be  shown  to  have  resulted  from  the  fraud,  if  practiced. 
*  Falsehood  and  deceit  are  always  subject  to  moral  con- 
demnation, but  it  is  not  appointed  to  human  tribunals 
to  sit  in  judgment  upon  mere  moral  delinquencies  or 
abstract  wrongs  affecting  only  the  conscience.  Such 
tribunals  take  cognizance  of  delinquencies  and  wrongs 
only  where  another  has  been  induced  by  them  to  do 
some  act  to  his  own  injury.'  " 

Accordingly,  judgment  was  given  for  Rosser  on  this 
note. 

RULINO  LAW 
Story  Case  Answer 

Even  though  a  person  has  been  deceived,  if  the  de- 
ception has  caused  him  no  damage,  he  cannot  complain. 
Deception  is  no  legal  wrong,  unless  some  injury  results 
from  the  deception,  however  reprehensible  it  may  be 


CONTRACTS  257 

from  a  moral  standpoint.  In  the  Story  Case,  Craft  is 
correct  and  Knight  cannot  plead  fraud  in  refusing  to 
pay,  in  accordance  witn  his  contract. 


B.    Fraud  Gives  the  Injured  Party  Right  to  Avoid  the 

Contract 

8T0BY  CASE 

Floyd  Huffcut,  a  stock  and  bond  salesman,  repre- 
sented to  Joseph  Mechem  that  the  Idaho  Electric  Com- 
pany owned  franchises  to  furnish  light  for  ten  towns. 
In  reliance  on  this  statement,  Mechem  purchased  stock 
of  the  company,  paying  $100  a  share.  He  learned,  sub- 
sequently, that  the  company  owned  but  three  fran- 
chises and  that  its  stock  was  worth  but  $30  a  share. 
What  can  Mecham  do? 

EULINQ  COUBT  CASE 

Belding  vs.  Frarikland,  Volume  8  Lea  {Tennessee) 
Reports,  Page  67. 

Leomson  &  Brothers,  merchants  at  Nashville,  or- 
dered goods,  on  November  3,  from  Belding  Brothers 
at  Cincinnati.  The  goods  were  shipped  on  November 
4  and,  on  the  7th,  Leomson  Brothers  made  an  assign- 
ment of  their  stock  to  J.  Frankland,  as  trustee  for  the 
benefit  of  creditors.  Belding  Brothers  maintain  that 
Leomson  Brothers  committed  fraud  in  making  the  pur- 
chase by  asserting  that  they  were  solvent,  when,  as  a 
matter  of  fact,  they  were  insolvent;  that,  therefore, 
Belding  Brothers  could  rescind  the  contract  and  take 
back  their  property. 

Justice  Cooper  gave  the  o-  .iiion  of  the  Court :  **  Si- 
lence is  not  fraud  when  there  is  no  dut}^  to  speak.  But 
when  a  purchaser  is  insolvent  at  the  time  of  purchase, 


258  CONTEACTS 

there  is  the  duty  on  his  part  to  state  his  financial  cir- 
cumstances, and  concealment  of  insolvency  is  a  mis- 
representation of  fact.  Therefore,  the  vendor  may 
rescind  the  contract,  disaffirm  the  sale,  and  take  back 
his  goods." 
Judgment  was  in  favor  of  Belding  Brothers. 

BULING  LAW 
Story  Case  Answer 

When  a  person  has  been  induced  to  enter  into  a  con- 
tract by  false  representation,  he  has  several  remedies. 
He  can  affirm  the  contract,  keep  what  he  has  received, 
and  merely  sue  for  the  damage  he  has  suffered;  i.  e. 
the  difference  between  the  value  of  what  he  has  re- 
ceived, and  the  value  of  what  he  bargained  for  as 
represented  to  him.  He  may  entirely  rescind  the  con- 
tract and  recover  the  money  he  has  paid  on  the  prop- 
erty he  has  given,  in  pursuance  of  the  contract.  He 
cannot,  however,  do  this  if  the  property  has  come  into 
the  hands  of  a  bona  fide  purchaser  for  value,  without 
notice  of  the  fraud. 

In  the  Story  Case,  Mechem  can  sue  to  recover  the 
difference  between  the  actual  value  of  the  stock  and 
the  amount  he  had  paid.  Or  he  can  rescind  the  con- 
tract, offer  to  return  the  stock,  and  demand  all  his 
purchase  money. 


4.     There  May  Be  Lack  of  Consent  Because  of  Duress 
STOEY  CASE 

Dan  McGrew  was  the  owner  of  a  large  tract  of  land 
near  the  Micaba  Eiver.  But  Holborn  K.  Axf  ord  owned 
the  land  between  the  land  of  McGrew  and  the  river. 
For  many  years,  McGrew  had  sought  to  purchase  the 


CONTRACTS  259 

land  from  Axford.  The  latter,  however,  refused  to 
entertain  any  offers  for  the  land.  McGrew  caused  the 
young  son  of  Axford  to  be  seized  and  carried  away. 
He  then  informed  Axford  that  the  safety  of  his  son 
depended  upon  whether  he  was  willing  to  agree  to  sell 
the  land.  Axford  knew  that  McGrew  was  a  dangerous 
and  desperate  man,  and  greatly  feared  for  the  safety 
of  his  son.  Consequently,  he  signed  a  writing,  in  which 
he  promised  to  convey  the  land  in  question  to  McGrew 
for  the  sum  of  $6,500.  His  son  was  restored  to  him 
in  safety.  Thereafter,  McGrew  demanded  a  convey- 
ance of  the  land,  in  accordance  with  the  terms  of  the 
agreement  above  recited.  Axford  refused  to  make 
the  conveyance.  McGrew  then  sued  for  a  conveyance 
of  the  land.  Axford  contended  that  his  consent  to  the 
agreement  was  procured  by  duress,  and  that  the  con- 
tract was  not  binding  upon  him.  What  should  be  the 
decision  of  the  court  under  the  foregoing  circum. 
stances  ? 

RULING  COimT  CASE 

Galusha  vs.  Sherman,  Volume  105  Wisconsin  Re- 
ports, Page  263 ;  Volume  47  Law  Reports,  Annotated, 
Page  417. 

Galusha  had  sold  some  foodstuff  to  Sherman.  The 
latter  claimed  that  it  was  unfit  for  food,  and  that  he 
had  been  poisoned  by  what  he  had  eaten  of  it.  He  en- 
gaged a  lawyer,  Sutherland,  to  direct  the  course  he 
should  pursue.  An  action  was  brought  against  Galusha 
for  damages.  After  this,  he  was  requested  to  come  to 
the  office  of  Sutherland.  Locked  in  the  room  alone 
with  the  lawyer,  he  was  told  that  he  had  better  settle 
the  civil  action,  or  immediate  steps  would  be  taken  to 
prosecute  him  criminally,  and  that  the  punishment 


260  CONTRACTS 

would  be  by  imprisonment  from  three  to  fifteen  years. 
Being  overcome  by  fear,  he  signed  a  note  for  $1,000, 
executed  a  mortgage  on  his  home  as  security  for  the 
note,  in  settlement  of  the  action  which  was  then  pend- 
ing against  him.  When  the  note  fell  due  he  refused 
to  pay  it,  and  suit  was  brought  upon  it. 

His  defense  was  the  fact  that  the  note  was  procured 
by  duress ;  that  because  of  the  threats  made  to  him  by 
Sutherland,  his  will  power  was  overcome  and  he  signed 
the  note,  when  he  would  never  have  done  so  otherwise. 

Decision:  Contractual  consent  is  never  acquired 
where  one  person  is  forced  to  enter  into  the  agreement 
against  his  will.  When  a  person  is  threatened  with 
physical  violence,  or  imprisonment,  and  his  will  is 
overcome,  an  agreement  entered  into  under  such  cir- 
cumstances lacks  contractual  consent,  and  cannot  be 
enforced  against  that  person.  Thus,  in  this  case,  the 
consent  of  Galusha  was  procured  by  unfair  means.  He 
was  forced  into  signing  the  note,  because  he  was  threat- 
ened with  imprisonment.  Consequently,  the  note  is  not 
enforcible  against  him. 

Mr.  Justice  Marshall  said:  **The  making  of  a  con- 
tract requires  the  free  exercise  of  the  will  power  of 
the  contracting  parties,  and  the  full  meeting  and  blend- 
ing of  their  minds.  In  the  absence  of  that,  the  essential 
of  a  contract  is  wanting;  and  if  such  absence  be  pro- 
duced by  the  wrongful  conduct  of  one  party  to  the  tran- 
saction, or  conduct  for  which  he  is  responsible,  where- 
by the  other  party,  for  the  time  being,  through  fear 
is  bereft  of  his  free  will  power,  for  the  purpose  of  ob- 
taining the  contract,  and  it  is  thereby  obtained,  such 
contract  may  be  avoided  on  the  ground  of  duress." 

Judgment  was  therefore  given  for  Galusha. 


CONTRACTS  261 

ETJLINa  LAW 
Story  Case  Answer 

When  the  consent  of  one  of  the  contracting  parties 
has  been  procured  through  duress,  his  consent  is  not 
real  and  he  is  not  compelled  to  fulfill  the  contract,  un- 
less he  wishes  to  do  so.  He  may,  as  it  is  said,  avoid 
the  contract  at  his  election,  and  the  other  party  has  no 
way  of  enforcing  it  against  him.  Duress  consists 
in  forcing  a  person  to  agree  to  a  contract,  or  to  give 
his  consent  thereto,  by  means  of  threats  of  violence,  or 
threats  of  imprisonment,  or  by  actual  violence  or  im- 
prisonment. Duress  exists,  not  only  when  the  violence 
or  imprisonment,  actual  or  threatened,  is  directed 
against  the  contracting  party,  but  exists  also  when  it 
is  directed  against  the  wife,  husband,  child  or  other 
near  relative  of  the  contracting  party.  The  violence  or 
imprisonment  whether  actual  or  threatened  must  have 
been  such  as  to  overcome  the  will  of  the  party.  It  must, 
moreover,  have  been  the  cause  of  his  entering  into  the 
contract.  Now,  in  the  Story  Case,  there  is  no  doubt  but 
that  the  threats  of  violence  to  the  child  of  Axford  was 
sufficient  to  overcome  his  will,  and  was  the  cause  of 
his  entering  into  the  contract.  This,  therefore,  consti- 
tuted duress.  The  contract  is  voidable  on  his  part,  and 
having  decided  to  repudiate  the  contract,  nothing  can 
be  recovered  thereon. 


5.     There  May  Be  Lack  of  Consent  Because  ot 

Undue  Influence 

STORY  CASE 

Henry  Harper  was  supporting  his  uncle.  Major  Hik- 
ens,  because  the  uncle  was  a  very  old  man  and  was 
reputed  to  be  worth  considerable  money.    To  his  dis- 


262  CONTEACTS 

appointment,  Harper  learned  that  the  old  man  had 
only  $5,000  and  he  had  willed  that  to  a  charitable  insti- 
tution. Thereupon,  Harper  attempted  to  secure  con- 
trol over  the  money  during  his  lifetime.  He  informed 
his  uncle  of  a  splendid  business  venture  needing  $5,000 
and  urged  the  Major  to  let  him  make  the  investment. 
The  uncle,  however,  refused  to  deliver  any  money  to 
his  nephew. 

Harper  persisted,  and  constantly  urged  upon  the 
Major  the  fact  that  much  had  been  done  for  him.  Fin- 
ally, Harper  persuaded  his  wife  not  to  speak  to  the 
uncle,  and  this  hurt  the  old  man  severely.  When 
Harper  threatened  to  put  him  out  of  his  home,  he  con- 
sented and  signed  a  contract  to  deliver  the  money  on 
the  first  of  the  following  month.  Harper  agreed  at 
the  same  time  to  give  the  uncle  one-fourth  of  the  profits 
that  might  accrue  from  the  investment. 

Major  Hikens  died  before  the  contract  was  carried 
out  and  his  executors  refused  to  deliver,  on  the  ground 
that  the  nephew  had  used  undue  influence  in  making 
the  contract.    Is  this  correct  ? 

RULING  COURT  CASE 

Pepkins  vs.  Hall,  Volume  3  Wendell  Reports  (New 
York),  Page  626. 

At  the  age  of  nine  years,  Perkins,  who  is  the  plain- 
tiff in  this  action,  was  placed  by  his  father  as  an  ap- 
prentice with  Rowland  Hall,  his  maternal  grandfather, 
to  learn  the  business  of  farming.  He  was  to  remain 
with  his  grandfather  until  he  reached  the  age  of  twen- 
ty-one. It  was  agreed  by  Hall  that  he  would  pay  Per- 
kins $500,  if  the  latter  continued  in  his  employment  un- 
til he  reached  that  age.  He  faithfully  served  his  grand- 


CONTEACTS  263 

father  on  the  farm,  until  lie  reached  his  majorty.  In 
the  meantime,  his  father  had  died.  And,  in  the  last 
year,  his  grandfather  died,  not  having  paid 
him  the  $500  before  his  death.  An  micle  of 
Perkins  was  made  the  personal  representative  of  the 
deceased  grandfather.  Instead  of  settling  with  Per- 
kins, by  paying  him  the  $500,  he  persuaded  Perkins, 
much  against  his  will,  to  accept  40  acres  of  land  in  pay- 
ment of  the  claim.  The  uncle,  at  the  time,  stated  that 
the  land  was  worth  about  $500 ;  but  it  afterwards  was 
shown  that  it  was  worth  only  about  $6.00  per  acre. 
Thereafter,  Perkins  brought  this  action  to  have  the 
transaction  set  aside. 

He  contended  that  his  consent  to  the  transaction  was 
gained  by  undue  influence  exercised  over  him  by  his 
uncle.  It  was  shown  that  Perkins,  when  he  made  this 
settlement  was  just  an  ignorant  country  boy,  with  little 
idea  of  the  value  of  land,  and  with  no  one  left  to  rely 
upon,  save  his  uncle  who  persuaded  him  to  enter  into 
the  transaction. 

Decision:  Undue  influence  was  exercised  over  the 
will  of  Perkins  by  his  uncle,  in  procuring  his  consent  to 
this  agreement.  When  one  person,  because  of  his  in- 
fluence by  relation  of  blood  or  otherwise,  persuades  a 
person  imder  his  influence  to  enter  into  an  agreement, 
such  agreement  is  not  binding,  unless  it  can  be  shown 
that  it  was  entirely  fair  and  just.  The  facts  of  this 
case  show  clearly  that  undue  influence  was  exercised 
by  the  uncle.  Furthermore,  the  transaction  was  very 
unfair  and  harsh.  Perkins  was  persuaded  to  give  up 
a  bona  fide  claim  for  $500  for  an  interest  in  land  which 
was  scarcely  worth  $250.  Such  an  agreement  is  not 
binding  upon  him. 


264  CONTRACTS 

Mr.  Chief  Justice  Savage  said:  "In  this  contract, 
on  the  one  side,  a  simple,  uneducated  boy,  who  knew 
only  how  to  work  on  a  farm ;  on  the  other  side,  a  man 
who  had  been  justice  of  the  peace,  and  may  therefore 
be  presumed  to  have  some  knowledge  of  law.  The  in- 
adequacy then  consists :  1.  In  conveying  40  acres  of 
mountain  rocks,  worth  about  $240,  in  satisfaction  of 
a  debt  of  $500  and  interest.  2.  One  of  the  contracting 
parties  arrived  at  mature  age,  perfectly  acquainted 
with  the  value  of  property,  and  from  his  very  'voca- 
tion' in  the  habit  of  taking  every  advantage  which  the 
law  would  permit;  the  other  an  ignorant,  simple,  un- 
suspecting boy,  unacquainted  with  property  and  with 
the  arts  and  intrigues  which  too  often  attend  advanced 
age.  3.  On  the  one  side  the  uncle  and  on  the  other 
the  nephew." 

Accordingly,  it  was  decided  that  the  transaction 
should  be  set  aside. 

ETJLING  IiAW 
Story  Case  Answer 

Where  one  party  to  a  contract  has  procured  the  con- 
sent of  the  other  by  means  of  undue  influence,  the  con- 
sent of  the  latter  is  said  to  be  unreal.  Consequently, 
the  contract  is  not  binding  upon  such  person  and  it 
may  be  avoided  at  his  election.  Duress  may  arise  in 
several  ways.  For  example,  it  may  arise  where  one, 
by  virtue  of  his  relation  of  confidence  to  another,  uses 
that  relation  to  procure  the  consent  of  the  other  to  a 
contract.  This  is  illustrated  by  the  contracts  of  a 
guardian  with  his  ward.  Duress  may  arise  where  a 
party  takes  advantage  of  a*nother  person  of  weak  mind 
to  procure  the  consent  of  that  person  to  a  contract. 
This  is  illustrated  by  a  contract  made  by  a  person  with 


CONTRACTS  265 

one  partially  insane,  or  with  an  imbecile.  It  may  arise 
where  a  person  takes  unfair  advantage  of  the  neces- 
sities or  distress  of  another  person.  This  is  illustrated 
by  the  Story  Case.  There  Henry  Harper  procured 
the  consent  of  his  uncle  to  the  contract  in  question  by 
threatening  to  turn  him  out  without  food  and  clothing. 
The  contract  was  not,  therefore,  binding  upon  the 
uncle,  and  the  executor  is  not  compelled  to  pay  the 
money  over  to  Henry  Harper. 


IV.    THE  OBJECT  OF  THE  CONTRACT  MUST 

BE  LEGAL 

1.     Contracts  May  Be  Made  Illegal  by  Statute 

STOEY  CASE 

While  Maine  was  a  *  *  dry ' '  state  King  Bainter  made 
the  following  contract  with  William  L.  Tate : 

**Iii  consideration  of  $35  to  be  given,  I,  Eong 
Bainter,  promise  to  sell  to  William  L.  Tate  in  the 
city  of  Bangor,  one  barrel  of  the  whiskey  which 
I  have  now  in  ny  house  in  said  city  of  Bangor. 

(Signed)  King  Bainter.'* 

After  receiving  the  money,  Bainter  refused  to  de- 
liver the  whiskey.  He  alleged,  as  a  reason,  that  the  sale 
of  liquor  in  Maine  was  unlawful.  Tate,  however,  sued 
him  for  breach  of  contract  to  deliver  the  whiskey.  He 
argued  that  the  plea  of  illegality  was  not  open  to  Bain- 
ter, since  Bainter  knew  w^hen  he  made  the  contract 
that  it  was  illegal.    Which  party  should  win? 

RULING  COUET  CASE 

Buckly  vs.  Humason,  Volume  50  Minnesota  Reports, 
Page  195. 


266  CONTRACTS 

Humason  was  the  owner  of  property  in  the  city  of 
Chicago.  He  went  to  Buckly,  who  was  in  the  real  es- 
tate business  in  Chicago,  and  requested  him  to  find  a 
purchaser  for  his  Chicago  property.  Humason  prom- 
ised to  pay  him  a  certain  per  cent  commission  if  a 
sale  of  the  property  was  made.  Buckly,  in  the  course 
of  a  few  weeks,  sold  the  property  and  demanded  his 
commission.  This,  Humason  refused  to  pay.  Suit  was 
then  brought  by  Buckly  upon  the  agreement  to  pay  him 
compensation  for  his  services. 

Humason  defended  on  the  ground  that  the  contract 
was  illegal  by  virtue  of  a  statute  in  the  State  of  Illinois, 
in  pursuance  of  which  the  City  of  Chicago  had  passed 
the  following  ordinance:  *'It  shall  be  unlawful  for  any 
person  to  exercise  within  the  City  of  Chicago  the  busi- 
ness of  real  estate  broker  without  a  license."  Buckly 
had  no  license,  and,  therefore,  the  contract  was  illegal. 

Decision :  Business  transactions,  in  violation  of  law, 
cannot  be  made  the  foundation  of  a  valid  contract ;  and 
the  general  rule  is  that  where  a  statute  makes  a  par- 
ticular business  unlawful  generally,  or  for  unlicensed 
persons,  any  contract  made  in  such  business  by  any 
one  not  authorized  is  void.  So  here  Buckly,  not  hav- 
ing a  license,  was  engaged  in  an  unlawful  undertaking 
when  he  made  the  contract  to  sell  the  property  and 
a  court  of  law  will  give  him  no  assistance  whatsoever 
in  his  attempt  to  collect  from  the  person  to  whom  he 
rendered  the  services." 

Judgment  was  given  for  Humason  in  this  action. 

EtrLING  LAW 
Story  Case  Answer 
K  the  object  of  an  agreement  is  illegal,  no  contract 
results.    A  contract  may  be  illegal  because  it  violates 


CONTRACTS  267 

some  positive  mle  of  law,  or  because  the  effect  of  such 
a  contract  is  evil,  and,  therefore,  contrary  to  public 
policy.  Where  a  statute  forbids  certain  kind  of  con- 
tracts, any  agreement  made  in  violation  of  such  a  stat- 
ute is  void.  Thus,  in  the  Story  Case,  there  was  a  statute 
which  prohibited  the  making  of  contracts  for  the  sale 
of  liquor.  In  consequence,  any  agreement  which  con- 
flicted with  that  statute  was  void.  Therefore,  judg- 
ment should  be  given  against  Tate.  In  case  of  an  il- 
legal contract,  the  law  will  assist  neither  party  to  en- 
force any  rights  under  the  contract. 


2.     Contract  May  Be  Illegal  Because  of  the  Common  Law 

A.     Contrary  to  Public  Policy 

STOEY  CASE 

Elizabeth  Hills,  a  woman  of  approximately  thirty- 
five  years,  agreed  with  George  G.  Jolmson,  an  old  man 
of  seventy-one,  that  she  would  keep  house  for  him, 
never  marry,  and  take  care  of  him  as  he  became 
older,  in  return  for  his  promise  to  give  her  one-hun- 
dred acres  of  land,  by  his  will.  This  agreement  was 
put  in  writing,  and  was  effective  in  so  far  as  the  for- 
malities were  concerned. 

Several  months  later,  Elizabeth  Hills  married  and 
left  the  employ  of  Jolmson.  He  brought  suit  against 
her  for  breach  of  her  contract.  Should  he  be  allowed 
to  recover? 

BXTUNG  COITBT  CASE 

Jerome  vs.  Bigelow,  Volume  QtQ  Illinois  Reports, 
Page  452 ;  Volume  16  Am,erican  Reports,  Page  597. 

Jerome  and  Bigelow  were  both  physicians,  and  were 
practicing  their  profession  as  specialists  in  the  City 
of  Chicago.  In  May,  1870,  they  entered  into  an  agree- 
ment by  which  Bigelow  was  to  retire  from  practice,  and 


268  CONTRACTS 

his  practice  was  to  be  taken  over  by  Jerome.  It  was 
agreed  that  Jerome  should  be  permitted  to  practice  in 
the  name  of  Bigelow,  to  personate  him,  to  pass  among 
strangers  as  Bigelow.  For  this,  Jerome  agreed  to  pay 
Bigelow  the  sum  of  $10,000  a  year  for  ten  years,  Bige- 
low, on  his  part,  agreeing  never  to  enter  the  practice  in 
the  city  again,  nor  to  interfere  with  Jerome's  use  of 
his  name.  A  few  years  passed  and  he  returned,  be- 
ginning practice  in  the  same  vicinity.  This  was  a 
suit  by  Jerome  to  have  Bigelow  restrained  from  so 
doing. 

Bigelow  entered  the  defense  that  the  contract  was 
void,  as  against  public  policy,  and,  therefore,  the  Court 
would  not  give  aid  to  either  in  enforcing  the  contract. 

Decision:  The  practice  of  medicine  is  such  a  vital 
and  important  profession,  that  every  person  who  must 
call  upon  the  profession  is  entitled  to  know  with  whom 
he  deals,  and  to  know  who  looks  after  his  physical  wel- 
fare. So,  any  agreement  by  which  the  public  is  barred 
from  this  important  information  is  against  public 
policy  and  void. 

Mr.  Justice  Scott  said  in  part :  *  *It  may  be  that  Jer- 
ome is  as  good  a  physician  as  Bigelow,  and  quite  as 
skillful  in  the  treatment  of  diseases.  But  that  is  not 
the  question.  Persons  in  need  of  medical  aid  are  en- 
titled to  the  physician  of  their  choice,  and  he  who  per- 
sonates another  in  that  regard  and  thus  imposes  on 
that  unfortunate  class  of  persons,  commits  a  great 
wrong.  A  contract  that  licenses  and  permits  such 
practices  is  absolutely  vicious,  and  a  court  will  never 
enforce  if 

Accordingly  it  was  held  that  the  contract  would  not 
be  enforced. 


CONTRACTS  269 

RULINa  LAW 
Story  Case  Answer 

An  agreement  contrary  to  public  policy  is  void 
and  nnenforcible.  An  agreement  is  said  to  be  con- 
trary to  public  policy  when  the  result  of  such  an  agree- 
ment is  evil  or  immoral  in  its  nature,  even  though  the 
acts  contemplated  are  not  expressly  forbidden  by  any 
statute  or  rule  of  the  common  law.  An  agreement 
which  tends  to  corrupt  men  in  public  office,  an  agree- 
ment which  tends  to  perversion  of  justice,  an  agree- 
ment which  tends  to  encourage  litigation,  an  agreement 
which  tends  to  increase  immorality,  an  agreement  in 
unreasonable  restraint  of  trade,  an  agreement  which 
restrains  marriage,  are  all  examples  of  contracts  void 
because  they  are  contrary  to  public  policy.  In  the 
Story  Case,  the  agreement  was  in  restraint  of  marri- 
age. The  public  is  interested  in  having  all  marriage- 
able persons  to  marry;  and,  although  tSere  is  no  way 
to  compel  them  to  do  so,  any  agreement  preventing  the 
free  exercise  of  this  important  relation  is  evil  in  its 
tendency,  and,  therefore,  void. 


B.     Contrary  to  Rules  of  Common  Law 
STORY  CASE 

In  the  days  when  the  "gold  brick '^  fraud  was  often 
practiced  on  the  unwary,  Katz  and  Lamb  agreed  to 
split  the  proceeds  of  all  the  money  they  could  fleece 
from  victims.  It  was  agreed  that  Katz  should  work 
into  the  grace  of  prospective  purchasers,  and  Lamb 
should  sell  the  fake  brick.  They  carried  on  a  remun- 
erative "business**  for  several  years,  and  had  a  fair 
sized  bank  account  in  the  name  of  Lamb.    Then  Lamb 


270  CONTRACTS 

refused  to  share  with  Katz.  Katz  tried  in  every  way 
to  get  his  part  of  the  illgotten  gains,  and  finally 
brought  suit  for  it.    Should  he  be  allowed  to  recover? 

EULING  COURT  CASE 

Atkins  vs.  Johnson,  Volume  43  Vermont  Reports, 
Page  78 ;  Volume  5  American  Reports,  Page  260. 

Atkins,  who  is  the  plaintiff  in  this  action,  was  the 
editor  and  proprietor  of  a  weekly  newspaper,  pub- 
lished in  Vermont.  Johnson  came  to  him  one  day,  and 
asked  him  if  he  would  publish  an  article,  entitled  "A 
Jack  At  All  Trades  Exposed. ' '  The  article  was  basely 
false,  and  highly  defamatory  of  one  Gregory,  concern- 
ing whom  it  was  written.  At  first,  Atkins  was  reluc- 
tant to  publish  it,  but  Johnson  assured  him  that  the 
whole  article  was  true,  and  that  a  perfect  defense  could 
be  made  to  any  suit  that  might  be  brought  by  Gregory. 
With  this  assurance,  Atkins  published  the  article, 
promising  Johnson  not  to  reveal  his  authorship. 
After  it  was  published,  Gregory  visited  Atkins  and  de- 
manded to  know  the  author.  Atkins  refused  to  tell 
him  until  he  had  consulted  Johnson  again.  John- 
son then  agreed  that  he  would  pay  any  and  all  expenses 
incurred  by  Atkins  in  defending  any  suit,  if  Atkins 
would  promise  not  to  reveal  his  name  as  author.  At- 
kins so  agreed.  Gregory  brought  suit  against  Atkins 
and  recovered  judgment,  which  Atkins  was  compelled 
to  pay.  Atkins  then  demanded  reimbursement  from 
Johnson,  which  Johnson  refused.  This  suit  was  then 
brought  to  recover  the  expenses  incurred  by  Atkins. 

Johnson  contended  that  the  object  of  the  contract 
was  illegal  in  that  it  was  an  agreement  to  publish  a 
libel,  and  such  being  the  case  no  recovery  could  be  had 
on  the  agreement 


CONTRACTS  271 

'  Mr.  Chief  Justice  Pierpont  delivered  the  opinion  of 
the  Court :  ' '  In  this  case,  these  persons  in  the  outset 
conspired  to  do  a  wrong  to  one  of  their  neighbors,  by 
publishing  a  libel  upon  his  character.  The  publication 
of  a  libel  is  an  illegal  act  upon  its  face.  This,  both 
parties  are  presumed  to  have  known.  The  publication, 
not  only  subjects  the  party  publishing  to  a  prosecution 
by  the  person  injured  for  damages,  but  also  to  public 
prosecution  by  indictment.*' 

**Both  these  parties  knew  that  they  were  arranging 
for  and  consununating  an  illegal  act,  one  that  subjects 
them  to  legal  liability,  hoping,  to  be  sure,  that  they 
might  defeat  it;  but  Atkins,  fearing  that  they  might 
not  be  able  to  do  so,  sought  to  protect  himself  from 
the  consequences  by  taking  a  contract  of  indemnity 
from  Jolmson.  This  being  so,  the  law  will  not  interfere 
in  aid  of  either.  It  will  not  inquire  which  of  the  two  is 
the  more  in  wrong,  but  will  leave  them  as  it  finds 
them.'' 

Judgment  was,  therefore,  given  for  Johnson. 

BULINa  LAW 
Story  Case  Answer 

Any  agreement  which  contemplates  the  commission 
of  a  crime  or  civil  wrong  is  void  and  unenf  orcible.  The 
commission  of  crimes  and  civil  wrongs  were  forbidden 
by  the  Common  Law.  Consequently,  any  agreement 
which  contemplated  the  commission  of  such  was  void. 
At  Common  Law  it  was  both  a  civil  and  criminal  of- 
fense to  publish  a  libel  whereby  the  public  peace  might 
be  disturbed,  and  the  reputation  of  a  person  injured. 
So,  any  agreement  which  contemplated  the  publication 
of  a  libel  was  void.    This  is  illustrated  by  the  Court 


272  CONTRACTS 

Case  of  Atkins  vs.  Johnson.  Likewise,  any  agreement 
to  divide  the  profits  of  a  fraudulent  transaction  is  void 
and  unenforcible.  In  the  Story  Case,  Katz  has  no 
remedy.  In  such  a  case,  the  Court  wiU  not  condescend 
to  settle  differences  between  thieves  and  scoundrels. 


3.    Effect  of  Illegality  of  the  Contract 
A.    When  the  Contract  Is  Severable 

STOEY  CASE 

J.  F.  Gooderl,  a  druggist,  sold  a  box  of  Havana 
cigars  and  a  bottle  of  whiskey  to  Martin  Cox;  charg- 
ing $4  for  the  cigars  and  $0.75  for  the  whiskey. 
Owing  to  the  local  option  liquor  law,  the  sale  of  the 
whiskey  was  illegal.  Cox  refused  to  pay  for  either 
the  cigars  or  the  whiskey  and  Gooderl  sued  him  for 
the  price  of  both.  Cox  defended  on  the  ground  that 
the  whole  transaction  was  tainted  with  the  illegality 
of  the  liquor  sale,  and  that,  as  a  result,  neither  the 
price  of  the  whiskey  nor  of  the  cigars  was  recoverable. 

Do  yon  agree  with  this  ? 

BUUNa  C0X7BT  CASE 

Union  Locomotive  Company  vs.  Erie  Railway  Com- 
pany, Volume  35  New  Jersey  Law  Reports,  Page  240. 

The  Union  Locomotive  Company  was  engaged  in  the 
business  of  manufacturing  locomotives  for  sale.  It 
entered  into  an  agreement  with  the  Erie  Railway  Com- 
pany, the  principal  terms  of  which  are  as  follows :  The 
Erie  Railway  Company  agreed  to  furnish  motive 
power  to  the  locomotive  company  for  transporting 
its  engines  at  a  certain  rate;  the  locomotive  com- 
pany agreed  to  furnish  its  own  cars,  on  which  the 
engines  were  to  be  transported,  and  to  bear  the  expense 


CONTRACTS  273 

of  loading  and  unloading  the  locomotives.  The  Erie 
company  also  agreed  that  it  would  not  carry  the  en- 
gines of  any  other  company  than  the  Union  Locomotive 
Company.  But  afterwards  the  Erie  Railway  Company 
refused  to  furnish  the  motive  power  to  the  Union  Loco- 
motive Company  and  this  action  was  brought  for  dam- 
ages. 

The  Erie  Railway  Company  entered  the  defense  that 
it  was  an  illegal  agreement,  because  it  had  promised 
not  to  transport  a  certain  kind  of  freight  for  any  other 
company.  This,  it  claimed,  w^as  illegal  because  the 
company  was  a  public  service  company,  and  bound  to 
give  service  to  all  alike  who  applied  for  it.  But  the 
Union  Locomotive  Company  insisted,  that,  even  as- 
suming this  contention  to  be  correct,  the  contract  was 
severable,  and  might  be  enforced  in  part;  and  that  it 
was  entitled  to  have  the  contract  enforced  so  far  as  it 
related  to  the  furnishing  of  motive  power. 

Decision:  Where  the  whole  object  of  a  contract  is 
illegal,  .the  contract  is  utterly  void  and  incapable  of  be- 
ing enforced.  If  a  part  of  the  contract  only  is  illegal, 
but  that  which  is  illegal  is  so  completely  tied  up  with 
that  which  is  legal  that  they  cannot  be  separated,  the 
whole  contract  fails.  But  if  the  contract  is  severable, 
and  that  which  is  legal  can  be  separated  from  that 
which  is  illegal,  then  that  part  which  is  legal  will  be 
enforced.  Li  this  case  the  Erie  Railway  Company 
promised  to  do  two  things :  To  furnish  motive  power, 
and  to  transport  engines  for  the  Locomotive  Company 
only.  These  two  things  are  easily  separated,  and  the 
Court  was  of  the  opinion  that  the  fact  that  the  latter 
promise  was  illegal  did  not  render  the  contract  wholly 
void. 


274  CONTRACTS 

Judgment  was  given  for  the  Union  Locomotive  Com- 
pany. 

EULING  LAW 
Story  Case  Answei 

We  have  just  learned  that  a  contract  which  is  illegal 
is  unenf  orcible.  But  now  suppose  that  a  part  of  the  con- 
tract is  legal  and  a  part  is  illegal,  what  then  will  the 
court  do  with  such  a  contract  ?  It  is  generally  held  that 
if  that  part  which  is  legal  can  be  separated  from  that 
part  which  is  illegal,  the  legal  part  will  be  enforced 
and  the  illegal  part  will  not  be.  Stated  in  other  words, 
if  that  part  of  the  contract,  which  is  not  tainted  with 
fraud,  can  be  readily  separated  from  that  part  which 
is  tainted  with  fraud,  the  untainted  part  will  be  en- 
forced. This  is  illustrated  by  the  Court  Case  of  the  Un- 
ion Locomotive  Company  vs.  Erie  Railway  Company. 
In  this  case  the  contract  contemplated  the  doing  of 
two  things ;  one  of  the  things  was  illegal,  and  the  other 
was  legal.  They  were  readily  separable  and  the  court 
enforced  that  part  which  was  legal.  The  same  may  be 
said  of  the  Story  Case.  The  sale  of  liquor  though  il- 
legal, did  not  affect  the  sale  of  the  cigars  and  therefore 
that  part  which  related  to  the  sale  of  the  cigars  may 
be  enforced. 


B.    When  the  Contract  Is  a  Unity 
STOEY  CASE 

A.  D.  Femald,  a  druggist,  made  a  contract  of  sale 
of  whiskey  and  playing  cards  to  H.  K.  Clark.  He  had 
no  license  to  sell  the  liquor  and  this  was  known  to 
Clark.  Both  these  men  had  often  carried  out  the  same 
kind  of  transaction,  and  Femald  made  a  special  price 


CONTRACTS  275 

of  $5  for  a  quart  of  whiskey,  and  a  dozen  packs  of 
cards.  Ordinarily,  he  sold  the  cards  for  $3  and  the 
whiskey  for  $3. 

Finally  Fernald  and  Clark  disagreed,  and  Fernald 
refused  to  deliver  the  articles.  Clark  sued  him  for 
breach  of  promise.  Fernald  defended  on  the  grounds 
that  the  whole  contract  was  illegal.  Is  this  a  good  de- 
fense? 

RULINa  COURT  CASE 

Randle  vs.  Edwards,  Volume  63  Arkansas  Reports, 
Page  318,  Volume  58  American  State  Reports,  Page 
108. 

Edwards  was  the  postmaster  at  Gurdon,  Arkansas. 
On  the  1st  day  of  December,  1892,  he  agreed  to  sell  to 
Randle,  for  the  sum  of  $200,  all  his  post  office  fixtures ; 
he  agreed  to  resign  and  reconunend  Randle  as  his 
successor.  He  resigned  at  that  time,  and  the  $200 
was  paid  to  him  by  Randle.  But  afterwards  Edwards 
failed,  and  refused  to  deliver  to  Randle  the  furniture, 
as  agreed.  Then  Randle  brought  this  action  to  recover 
his  two  hundred  dollars. 

Edwards  contended  that  the  contract  was  void,  be- 
cause it  was  made  to  create  a  vacancy  in  a  public  office, 
and  recommend  a  successor.  Randle,  however,  insisted 
that  the  contract  was  severable,  in  that  Edwards  prom- 
ised two  things :  to  resign  and  recommend  him  as  suc- 
cessor, and  to  sell  his  furniture.  Although  the  former 
is  illegal,  the  latter  is  legal  and  should  be  enforced. 

Mr.  Chief  Justice  Bunn  delivered  the  opinion  of  the 
court :  ' '  The  contract,  as  explained  by  the  pleadings 
and  testimony,  is  an  indivisible  one ;  that  is  to  say,  the 
lawful  and  the  unlawful  parts  cannot  be  separated,  so 
as  to  enforce  the  one  and  annul  the  other.    Looking  at 


276  CONTRACTS 

the  transaction  in  the  most  favorable  light,  it  is  in  con- 
travention of  public  policy,  simply  because  it  is  an  ef- 
fort to  create  a  vacancy  in  a  public  office,  and  to  fill 
that  vacancy  by  and  through  methods  that  the  law  can- 
not tolerate.  The  contract  is,  therefore,  null  and  void 
throughout. '  * 

Judgment  was  given  for  Edwards. 

RULING  LAW 
Story  Case  Answer 
If  a  contract  consists  of  something  which  is  legal 
and  something  which  is  illegal,  and  these  things  are  so 
closely  related  that  the  legal  cannot  be  separated  from 
the  illegal,  the  Court  will  treat  the  contract  as  if  it  were 
completely  illegal,  and  refuse  to  have  anything  to  do 
with  the  contract.  In  the  Court  Case  of  Randle  vs.  Ed- 
wards, the  contract  contemplated  the  doing  of  two 
things;  the  creation  of  a  vacancy  of  a  public  office, 
which  was  illegal ;  and  the  sale  of  office  furniture,  which 
was  legal.  To  bind  the  contract,  $200  was  paid.  The 
Court  was  of  opinion  that  it  would  be  impossible  to  de- 
termine how  much  money  was  paid  by  way  of  purchase 
of  the  furniture,  and  how  much  was  paid  as  a  consider- 
ation for  the  vacancy  of  the  public  office.  This  being 
the  case,  the  Court  refused  to  deal  with  the  contract. 
It  considered  the  agreement  as  if  it  had  been 
wholly  illegal.  This  is  true  of  the  sale  in  the  Story 
Case,  and  Clark  cannot  recover  anything. 


C.    The  Court's  Action  on  an  Illegal  Contract 

STORY  CASE 

The  Western  and  Indiana  Railroad  Company  paid 
William  Anson,  an  attorney,  $10,000  under  an  agree- 


CONTRACTS  277 

ment  whereby  he  promised  to  use  this  money  to  im- 
properly influence  the  passing  of  a  law  at  Springfield, 
the  state  capital.  After  Anson  acquired  this  money,  he 
refused  to  carry  out  his  contract  and  use  the  money  as 
stipulated.  The  railway  company  brought  suit  to  re- 
cover for  its  loss.    Can  it  recover? 

RUUNG  COURT  CASE 

Bernard  vs.  Taylor,  Volume  23  Oregon  Reports, 
Page  416,  Volume  18  Lawyers*  Reports  Annotated, 
Page  859. 

Taylor  and  others  had  arranged  for  a  foot  race  to 
be  run  by  and  between  Anderson  and  Grant  at  an 
agreed  time.  Having  made  the  arrangement,  bets  upon 
the  two  contestants  were  solicited.  Bernard  decided 
that  he  would  like  to  wager  some  money  on  the  race. 
So  he  deposited  $500  in  gold  with  Taylor  on  a  bet  that 
Grant  would  win  the  race.  Before  the  time  set  for 
the  event,  Bernard  became  suspicious.  He  feared 
from  w;hat  he  had  heard,  after  he  put  up  his  money, 
that  the  race  was  "fixed'*  and  that  it  was  not  to  be  a 
fair  and  just  contest.  He  went  immediately  to  Taylor 
and  demanded  the  return  of  his  money.  Taylor  re- 
fused to  give  it  to  him.  Thereupon,  Bernard  brought 
this  action  to  recover  his  money. 

Taylor  contended  that,  since  it  was  a  wagering  con- 
tract, the  Courts  should  give  relief  to  neither. 

Decision:  Wagers  are  inconsistent  with  the  estab- 
lished interests  of  society  and  are  in  conflict  with  the 
morals  of  the  age.  They  are,  therefore,  void  on  the 
ground  of  public  policy.  While  such  a  contract  is  still 
executory,  however,  either  party  may  rescind  the  con- 
tract and  recover  any  property  he  may  have  put  up; 


\ 

278  CONTRACTS 

but  if  the  contract  is  executed,  nothing  paid  or  deliv- 
ered under  the  agreement  can  be  recovered.  In  this 
case  the  wager  was  not  executed  at  the  time  Bernard 
demanded  the  return  of  his  money.  He  repented  in 
time  and  is  entitled  to  recover  his  money. 

Mr.  Chief  Justice  Lord  said  in  part:  "The  general 
rule  is,  that  the  law  will  not  interfere  in  favor  of 
either  party  in  pari  delicto — ^in  equal  wrong — ^but  will 
leave  them  in  the  condition  in  which  they  are  found, 
from  motives  of  public  policy.  There  is  no  doubt, 
where  money  has  been  paid  on  an  illegal  contract 
which  has  been  executed,  and  both  parties  are  in  pari 
delicto,  the  courts  will  not  compel  the  return  of  the 
money  so  paid.  But  the  cases  show  an  important  dis- 
tinction is  made  between  executory  illegal  contracts 
and  executed  illegal  contracts.  While  the  contract  is 
executory,  the  law  will  neither  enforce  it,  nor  award 
damages,  but  the  party,  paying  the  money  or  putting 
up  the  property,  may  rescind  the  contract  and  recover 
the  money  or  the  property.  If  the  contract  is  already 
executed,  nothing  paid  or  delivered  can  be  received 
back.  This  arises  out  of  the  distinction  between  an 
action  in  affirmance  or  an  illegal  contract,  and  one  in 
disaffirmance  of  it.  In  the  former,  such  an  action  can- 
not be  maintained,  but  in  the  latter,  an  action  may  be 
maintained  for  money  had  and  received.  The  reason 
is  that  the  plaintiff's  claim  is  not  to  enforce  but  to  re- 
pudiate an  illegal  transaction.'* 

Judgment  was  given  for  Bernard. 

RXTLING  LAW 
Story  Case  Answer 

The  general  rule,  undoubtedly,  is  that  the  Courts  will 
assist  neither  party  in  enforcing  an  illegal  agreement. 


CONTKACTS  279 

The  policy  of  the  law  is  to  discourage  the  making  of 
such  agreements.  The  policy  is  best  effectuated  by 
leaving  the  parties  without  any  court  remedy.  If  one 
party  has  paid  money  under  an  illegal  agreement,  the 
general  rule  is  that  he  may  not  recover  it,  even  though 
the  other  does  not  perform  his  part  of  the  contract. 
Also,  if  one  party  performs  his  part  of  the  contract 
which  is  illegal,  the  other  party  may  not  be  compelled 
to  perform  his  part.  A  distinction  is  taken  between 
contracts  which  are  illegal,  because  of  the  nature  of 
the  transaction,  contracts  termed  bad  in  them- 
selves, and  contracts  which  are  illegal  merely 
because  they  are  prohibited.  In  the  latter  case,  if  the 
illegal  contract  is  still  executory,  it  is  said  that,  if  one 
of  the  parties  repents  of  the  transaction  before  it  is 
executed,  he  may  recover  what  he  has  paid  imder 
the  contract.  Thus,  in  the  Court  Case,  gambling  con- 
tracts were  not  generally  held  void  at  Common  Law, 
but  are  now  generally  forbidden  by  statute.  Bernard 
repented  before  the  race  was  run,  and  the  Court  held 
that  he  was  entitled  to  recover  the  money  he  had 
placed  as  a  bet  upon  the  outcome  of  the  race. 

In  the  Story  Case,  the  railroad  cannot  recover  be- 
cause the  contract  is  illegal  by  nature,  bad  in  itself,  be- 
cause it  was  against  public  welfare. 


V.    CONTRACTS  MAY  BE  DISCHARGED 

1.     By  Agreement 

A.    Waiver 

STOET  CASE 

The  Lowenthal  Shoe  Company  agreed  to  deliver  a 
consignment  of  shoes  to  Gilbert  Shaw  in  return  for  his 


280  CONTRACTS 

promise  to  pay  for  the  same.  Delivery  was  to  be  made 
on  the  18th  of  September.  On  the  1st  of  September,  the 
Lowenthal  Company  saw  that  it  would  be  miable  to 
make  the  delivery  and  it  so  informed  Shaw.  He 
said: 

*'It  doesn't  make  much  difference.  Just  so  you  have 
them  here  by  the  last  of  the  month,  it  will  be  all  right.'' 

On  the  20th  of  September,  Shaw  brought  suit  for 
breach  of  the  promise  to  deliver  on  the  18th.  The  Low- 
enthal Company  defended  with  the  agreement  to  waive 
delivery  on  that  date.    Is  the  defense  good? 

EULING  COUKT  CASE 

Collyer  S  Company  vs.  Moulton,  Volume  9  Rhode 
Island  Reports,  Page  90;  Volume  98  American  Deci- 
sions, Page  370. 

Moulton  and  another  were  partners,  engaged  in  the 
business  of  building  machines.  Collyer  made  a  verbal 
contract  with  the  partners,  by  which  they  were  to  build 
a  certain  machine  for  Collyer  and  Company.  After  a 
small  part  of  the  work  was  done,  the  firm  was  dis- 
solved. On  the  same  day  Moulton  notified  Collyer  of 
the  dissolution  of  the  Company,  and  stated  that  he 
could  no  longer  be  responsible  for  the  contract.  Collyer 
and  Company  then  promised  to  release  Moulton,  and 
look  to  his  partner  alone  for  the  performance  of  the 
contract.  However,  Moulton  thereafter  was  sued  by 
Collyer  and  Company  for  breach  of  this  contract. 

Moulton  defended  on  the  ground  that  he  had  been  re- 
leased by  the  promise  of  Collyer  and  Company  to  look 
to  his  partner. 

Mr.  Justice  Potter  said:  "There  is  some  apparent 
inconsistency  in  the  language  used  in  the  reports  and 


CONTRACTS  281 

texts  as  to  the  maimer  in  which  a  simple  contract  may 
be  annulled.  We  think  the  rule  is,  that  so  long  and 
so  far  as  the  contract  remains  executionary,  and  before 
breach,  it  may  be  annulled  by  agreement  of  all  parties ; 
but  that  when  it  has  been  broken,  and  a  right  of  action 
has  accrued,  the  debt  or  damage  can  only  be  released 
for  a  consideration;  and  even  so  far  as  it  remains  ex- 
ecutory, it  may  be  said  that  the  agreement  to  annul 
on  one  side  may  be  taken  as  consideration  to  annul  on 
the  other  side." 

The  Court  was  of  the  opinion  that  notice  to  Collyer 
and  Company  and  their  declaration  to  look  to  the  part- 
ner amounted  to  a  waiver  of  the  contract,  so  far  as  it 
remained  unperformed,  and  released  Moulton  as  to 
that  part. 

Accordingly  judgment  was  given  for  Moulton  in  this 
action. 

RUUNQ  LAW 
Story  Case  Answer 

By  discharge  of  a  contract  is  meant  that  all  the 
rights  and  obligations  arising  from  the  contract  are 
gone.  There  are  no  longer  any  rights  which  can  be 
established,  or  duties  which  can  be  enforced.  It  is 
generally  said  that  a  contract  may  be  discharged  by 
waiver.  "Waiver  really  amounts  to  nothing  more  than 
the  making  of  a  new  contract.  It  must  be  supported 
by  a  consideration  and  in  other  respects  comply  with 
the  rules  governing  the  validity  of  any  other  contract. 
So  long  as  the  contract  remains  executory,  it  may  be 
discharged  by  a  waiver.  In  such  case,  a  sufficient  con- 
sideration is  to  be  found  in  the  parties  giving  up  their 
mutual  rights  under  the  contract.    A  agrees  to  sell 


282  CONTEACTS 

a  horse  to  B  in  thirty  days.  A  has  a  right  to  force  B 
to  take  the  horse  or  pay  damages.  B  has  a  right  to 
force  A  to  sell  the  horse  or  pay  damages. 

So  long  as  this  contract  remains  executory  or  unper- 
formed it  may  be  discharged  by  a  simple  waiver,  and  a 
sufficient  consideration  is  found  in  the  agreement  of 
A  to  give  up  his  right  in  consideration  that  B  will  give 
up  his  right.  But  if  the  contract  has  been  executed  on 
one  side,  or  there  is  the  duty  to  perform,  it  may  not  be 
discharged  by  waiver  without  a  new  consideration.  In 
the  above  case  suppose  that  A  had  delivered  the  horse 
but  B  had  not  paid  the  price,  A  alone  now  has  a  right 
under  the  contract ;  B  has  acquired  his  right,  i.  e.,  the 
right  to  buy  the  horse.  In  order  to  waive  the  duty  of 
B  to  pay  for  the  horse,  there  must  be  a  new  considera- 
tion. If  in  the  Story  Case,  the  Lowenthal  Shoe  Com- 
pany had  waited  until  September  20  to  inform  Shaw 
of  its  inability  to  deliver,  and  he  had  given  the  same 
answer,  he  could  nevertheless  sue  at  once,  because 
there  was  a  breach  of  contract  on  September  18. 
After  this  date  any  promise  by  Shaw  requires  a  new 
consideration.  But  as  the  agreement  stands,  there  was 
no  breach  since  a  waiver  was  made  before  September 
18.    The  defense  was  good. 


B.     Substituted  Agreement 
STORY  CASE 

Strother  Eastman  promised  to  sell  his  typewriter 
to  H.  E.  Gunn  for  $50.  Later,  Gunn  decided  that  he 
did  not  want  the  machine,  although  he  said  that  he 
would  take  it  if  Eastman  insisted.  Eastman  then 
made  the  following  statement : 


CONTRACTS  283 

**I  am  not  anxious  to  sell  it.  So,  if  you  mil  agree 
to  pay  the  same  price  for  my  set  of  carpenter's  tools, 
I'll  let  you  out." 

Gunn  agreed  to  this  proposition.  Several  days 
later,  Gunn  secured  a  position  as  stenographer  and 
wanted  the  typewriter.  Eastman  refused  to  deliver  it 
and  Gunn  sued  him.    Should  he  recover? 

BnUNO  OOUBT  CASE 

Goss  vs.  Lord  Nugent,  Volume  5  Barnewell  <&  Adol- 
phus  Reports,  Page  58. 

By  an  agreement  in  writing,  Goss  contracted  to  sell 
Lord  Nugent  several  lots  of  land  and  to  make  a  good 
title  to  all  of  them.  Lord  Nugent  paid  a  deposit  upon 
the  purchase  price.  It  was  afterwards  discovered  that 
a  good  title  could  not  be  made  by  Goss  to  one  of  the 
lots.  Lord  Nugent  and  Goss  then  agreed,  verbally,  to 
waive  the  defective  title  as  to  that  lot.  Goss  then  de- 
livered possession  of  all  the  lots  to  Lord  Nugent,  which 
he  accepted.  Lord  Nugent,  thereafter,  refused  to  pay 
the  full  purchase  price.  This  suit  was  brought  to  re- 
cover the  same. 

Lord  Nugent  contended  that  he  was  not  obliged  to 
pay  the  full  price,  because  title  had  not  been  made  out 
to  all  the  lots.  Goss  insisted  that  Nugent  had  waived 
this  as  to  the  lot  in  question,  and  was,  therefore,  liable. 

Decision :  As  a  general  rule  the  parties  may  at  any 
time  substitute  any  new  agreement,  which  they  may 
choose,  for  the  old  one.  In  this  case,  there  was  a  new 
agreement  which  was  substituted  for  the  old,  and  under 
ordinary  circumstances  would  have  taken  the  place 
of  the  old ;  but  the  Statute  of  Frauds  requires  that  all 
agreements  relating  to  the  sale  of  land  shall  be  evi- 


284  CONTRACTS 

denced  by  an  agreement  in  writing,  signed  by  the  party 
sought  to  be  charged. 

Mr.  Chief  Justice  Denman  said:  ''After  an  agree- 
ment has  been  reduced  to  writing,  it  is  competent  to 
the  parties,  at  any  time,  before  breach  of  it  by  a  new 
contract,  in  writing  or  not  in  writing,  either  altogether 
to  waive,  or  dissolve,  or  annul  the  former  agreement, 
or  in  any  manner  to  add  to,  or  subtract  from,  or  vary, 
or  qualify  the  terms  of  it,  and  thus  to  make  a  new  con- 
tract, which  is  to  be  proved,  partly  by  the  written 
agreement,  and  partly  by  the  subsequent  verbal  terms 
engrafted  upon  what  will  be  thus  left  of  the  written 
agreement."  But  this  does  not  apply  to  contracts  in 
reference  to  the  sale  of  land ;  they  must  be  in  writing. 
And  had  the  agreement  here  been  in  writing,  it  would 
have  been  good. 

Accordingly  it  was  decided  that  judgment  should 
be  given  for  Lord  Nugent. 

EUIilNG  LAW 
Story  Case  Answer 

A  contract  may  also  be  discharged  by  a  new  or  sub- 
stituted agreement.  This  applies  whether  the  original 
contract  was  executory  in  whole  or  executed  in  part. 
Such  an  agreement  must  also  conform  to  all  the  rules 
which  govern  the  validity  of  any  other  contract.  There- 
fore, it  is  necessary  that  the  new  agreement  should  be 
supported  by  a  consideration.  But  this  consideration 
may  be  found  in  the  parties  giving  up  the  old  rights 
and  assuming  new  duties.  In  the  Story  Case,  the  con- 
tract to  sell  the  typewriter  was  discharged  by  the  sub- 
stituted agreement  for  the  sale  and  purchase  of  the 
carpenter's  tools. 

Judgment  should  be  given  against  Gunn  in  that  case. 


CONTRACTS  285 

C.     By  a  Provision  in  the  Contract 
STOEY  CASE 

Franklin  Griswold,  a  famous  portrait  painter, 
agreed  to  paint  a  picture  of  the  dead  child  of  Eaton  L. 
Walker.  It  was  agreed  that  Walker  would  not  have  to 
take  the  picture  of  the  child  unless  it  was  * '  to  his  satis- 
faction. ' '  After  the  portrait  was  finished,  Walker  was 
not  pleased  with  it.  He  refused  to  accept  and  pay  for 
it.  Griswold  sued  him  for  the  price  of  the  work.  At 
the  trial,  Griswold  showed  that  the  picture  was  a  mas- 
terpiece and  any  reasonable  man  would  be  satisfied 
with  it. 

Walker  defended  on  the  grounds  that  the  portrait 
was  not  a  good  likeness ;  that  he  was  not  satisfied  with 
the  work,  and  that  the  contract  was  so  made  that  he 
could  refuse  to  take  the  portrait,  if  he  pleased.  Which 
party  should  win? 

RULING  COURT  CASE 

Oeipel  vs.  Smith,  Law  Reports  Volume  7,  Queen's 
Bench  Court,  Page  404. 

Smith  was  the  owTier  of  a  certain  vessel.  It  was 
agreed  between  him  and  Geipel  that  he.  Smith,  should 
with  all  convenient  speed,  sail  to  a  coal  spout  as  di- 
rected by  Geipel  and  there  load  a  full  cargo  of  coal. 
It  was  further  agreed  that  Geipel  should  then  proceed 
to  Hamburg  and  there  deliver  the  coal  to  certain  per- 
sons. Their  agreement  contained  the  provision  that  the 
contract  should  be  subject  to  the  * '  restraint  of  princes 
and  rulers.^'  Just  as  Smith  was  preparing  to  set  out 
to  get  this  cargo  of  coal,  the  war  of  1870,  between 
France  and  Germany  broke  out.  The  port  of  Ham- 
burg was  closed,  and  Smith  abandoned  his  contract. 
Suit  was  brought  against  him  for  damages. 


286  CONTRACTS 

He  defended  on  the  ground  that  he  was  excused 
from  further  performing  by  the  very  terms  of  his  con- 
tract, in  that  it  was  provided  that  the  performance  was 
subject  to  the  ** restraint  of  princes  and  rulers." 

Decision :  It  is  always  competent  for  the  parties  to 
stipulate  in  their  agreement  when  the  contract  shall 
come  to  an  end.  They  may  agree  that  upon  the  hap- 
pening or  non-happening  of  a  given  event,  the  contract 
shall  come  to  an  end.  In  case  the  event  happens,  or 
does  not  happen,  as  the  case  may  be,  the  contract  auto- 
matically comes  to  an  end.  In  this  case,  it  was  provided 
that  the  performance  of  the  contract  was  to  be  subject 
to  the  restraint  of  princes  and  rulers;  the  closing  of 
the  port  of  Hamburg  was  just  such  an  act,  and  by  that 
act  Smith  was  excused  from  further  performance  of 
the  contract. 

Judgment  was  given  for  Smith  in  this  case. 

BUUNG  LAW 
Story  Case  Answer 

A  contract  may  be  discharged  by  a  provision  in  the 
original  contract.  That  is,  if  the  parties  agree  that 
the  contract  shall  come  to  an  end  upon  the  happening 
or  non-happening  of  some  event,  then  the  happening  or 
non-happening  of  that  event,  as  the  case  may  be,  will 
discharge  the  contract.  In  the  Court  Case  of  Geipel 
vs.  Smith,  the  parties  agreed  that  the  contract  should 
come  to  an  end  in  case  the  performance  of  the  contract 
was  hindered  by  international  difficulties.  These  in- 
ternational difficulties  having  intervened,  the  contract 
was  discharged. 

In  the  Story  Case,  the  picture  must  be  made  to 
Walker's  satisfaction.    The  court  wiU  not  determine 


CONTRACTS  287 

whether  he  is  acting  unreasonably  in  refusing  his  sat- 
isfaction, and  the  painter  cannot  recover. 


2.     By  Performance 
A.     Payment 
STORY  CASE 

W.  L.  Grubb,  of  Rochelle,  Illinois,  ordered  a  suit  of 
clothes  from  a  Chicago  clothing  company.  The  com- 
pany made  the  suit  in  accordance  with  measurements 
taken,  forwarded  the  suit  to  Mr.  Grubb  for  his  ap- 
proval, and  directed  him  to  remit  the  purchase  price 
immediately.  It  was  also  stated,  in  its  letter,  that 
payment  should  be  made  by  certified  check  or  New 
York  exchange.  Mr.  Grubb  did  not  care  to  go  to  the 
trouble  and  expense  of  preparing  either  form  of  pay- 
ment requested,  and  inserted  two  ten  dollar  bills  in  a 
posted  letter  by  way  of  payment  for  the  suit.  The  let- 
ter was  never  received  by  the  clothing  company,  and 
it  sued  him  for  the  price  of  the  suit.  He  pleaded 
that  his  obligation  was  discharged  because  he  had 
made  one  payment.  What  should  be  the  decision  of 
the  court  in  this  case? 

EXJIiING  COUET  CASE 

Union  Biscuit  Co.  vs.  Springfield  Grocer  Co.,  Volume 
143  Missouri  Appeal  Reports,  Page  300. 

The  Springfield  Grocer  Company  had  bought  about 
$212.46  worth  of  goods  from  the  Union  Biscuit  Com- 
pany during  the  year  1904.  The  Union  Biscuit  Com- 
pany admitted  payment  of  the  account,  except  as  to  the 
sum  of  $86.48.  It  appeared  that  the  grocer  company 
drew  a  draft  upon  the  National  Bank  of  Exchange  of 


288  CONTRACTS 

Springfield,  Missouri,  to  its  own  order  for  this  sum 
of  $86.48.  This  draft  was  endorsed  to  the  Union  Bis- 
cuit Company  and  mailed  to  it.  One  H.  E.  Bixby 
was  at  that  time  in  the  employ  of  the  Union  Biscuit 
Company  as  a  bookkeeper  and  by  some  means  ob- 
tained possession  of  this  draft.  He  erased  the  name 
*' Union  Biscuit  Co."  in  the  endorsement,  inserted  his 
own  in  its  place,  and  cashed  the  draft  as  and  for  his 
own.  The  draft  was  paid  in  due  course  by  the  National 
Bank  of  Exchange.  When  the  Union  Biscuit  Company 
discovered  what  had  been  done,  it,  nevertheless,  de- 
manded payment  from  the  grocer  company.  The  latter 
refused  to  pay.  This  suit  was  then  brought  for  the 
$86.48. 

The  grocer  company  contended  that  it  had  paid 
the  amount  and  that  the  Union  Biscuit  Company 
should  not  be  permitted  to  recover. 

Decision :  Payment  of  money  due  under  a  contract 
discharges  the  contract.  But  it  is  not  an  easy  ques- 
tion to  determine  what  constitutes  payment.  When 
the  creditor  accepts  the  payment  made  by  his  debtor, 
and  agrees  that  the  debt  shall  thereby  be  discharged, 
it  is  discharged.  Payment  of  money  and  acceptance 
by  the  creditor  constitute  a  discharge  of  the  contract. 
When  negotiable  paper,  such  as  checks,  drafts,  bills 
or  notes,  are  given  in  payment  of  a  debt,  the  debt  is 
not  actually  discharged  until  such  negotiable  paper  is 
actually  paid,  unless  the  parties  expressly  agree  that 
it  shall  operate  as  an  immediate  discharge.  So,  in  this 
case,  there  was  no  payment,  because  the  draft  was 
never  actually  paid  to  the  Union  Biscuit  Company;  it 
may  recover  this  amount  from  Springfield  Grocer  Com- 
pany.   This  does  not  mean,  however,  that  the  grocer 


CONTRACTS  289 

company  is  the  loser.  The  endorsement  was  forged 
and  the  bank  must  repay  the  grocer  company  for  pay- 
ing out  this  money  upon  a  forged  instrument,  to  a  per- 
son not  entitled  to  it. 

Mr.  Justice  Nixon  said:  "In  order  to  constitute  a 
payment,  as  that  word  is  used  in  law,  there  must  be 
(1)  a  delivery,  (2)  by  the  debtor  or  his  representa- 
tives; (3)  to  the  creditor  or  his  representatives;  (4) 
of  money  or  something  accepted  by  the  creditor  as  the 
equivalent  thereof;  (5)  with  the  intention  on  the  part 
of  the  debtor  to  pay  the  debt  in  whole  or  in  part ;  and 
(6)  accepted  as  payment  by  the  creditor. 

**The  taking  of  a  check,  bill  of  exchange,  or  note  for 
a  debt  is  not  payment  of  the  debt,  unless  the  creditor 
expressly  agrees  to  take  it  as  such;  it  is  not  payment 
until  the  money  is  received  on  it.'* 

Judgment  was  given  for  Union  Biscuit  Company. 

SnUNG  I.AW 
Story  Case  Answer 

Where  the  obligation  of  a  contract  consists  in  the 
payment  of  money,  the  payment  of  that  sum  in  the 
manner  authorized  in  legal  tender  obviously  discharges 
the  contractual  obligation.  Payment  in  counterfeit 
money,  accepted  by  the  other  party  and  believed  at  the 
time  by  both  to  be  good  money,  is  not  a  payment 
discharging  the  contract.  When  the  person  receiv- 
ing the  payment  discovers  that  the  money  is  false,  he  is 
entitled  to  another  payment  in  good  money,  provided 
he  is  not  negligent  in  notifying  the  other  party  of  the 
fact  that  the  money  was  counterfeit.  Unless  expressly 
agreed  upon,  the  acceptance  of  a  negotiable  instrument, 
as  a  bill,  note  or  check  is  not  absolute,  but  only  condi- 


290  CONTRACTS 

tional  payment.  The  obligation  is  not  absolutely  dis- 
charged until  the  instrument  is  actually  paid  in  money 
to  the  person  to  whom  the  debt  is  owed. 

In  the  Story  Case,  the  payment  was  not  made  in  the 
manner  authorized,  and,  consequently,  there  was  no 
payment.  If  the  clothing  company  had  said  that  pay- 
ment might  be  made  by  sending  money  through  the 
mail  in  an  unregistered  letter,  the  posting  of  the  letter, 
containing  the  money,  would  have  been  a  payment. 
Otherwise  it  is  not  a  payment.  Judgment  should  be 
given  in  the  case  for  the  clothing  company. 


B.    Tender 
STOBY  CASE 


Mr.  Van  Revel  and  Mr.  Millikan  owned  summer 
homes  near  Lake  Geneva.  Mr.  Millikan  owned  a  small 
sail  boat,  which  he  desired  to  sell.  He  offered  it  to  Mr. 
Van  Revel  for  $950.  The  latter  replied  that  he  would 
purchase  it,  if  Mr.  Millikan  would  paint  it,  put  on  new 
sails,  and  deliver  it  within  ten  days.  Mr.  Millikan 
caused  the  desired  improvements  to  be  made.  Seven 
days  later,  he  sailed  the  boat  up  to  Mr.  Van  RevePs 
landing  and  told  him  that  the  boat  was  ready.  Mr. 
Van  Revel  found  no  complaint  with  the  work  done, 
but  said  that  he  had  decided  that  he  would  not  pur- 
chase a  boat.  Mr.  Millikan,  however,  refused  to  accept 
his  repudiation  of  the  contract.  He  anchored  the  boat 
at  the  landing  with  the  remark:  "I  have  done  all  I 
am  legally  bound  to  do ;  the  boat  is  now  yours. "  That 
night  the  boat  was  wrecked  in  a  storm.  Whose  loss 
was  it? 


CONTRACTS  291 

BTILINa  C0X7BT  CASE 

Barney  vs.  Bliss,  Volume  1  D.  Chipman  Reports, 
Page  399 ;  Same  Case,  Volume  12  American  Decisions, 
Page  696. 

Bliss  executed  a  contract  to  Barney,  by  which  he 
promised  to  deliver  to  the  latter  ten  thousand  good, 
merchantable  pine  boards,  on  October  1,  at  the  saw  mill 
of  the  former.  It  was  shown  by  Bliss  that,  on  the  1st  of 
October,  the  boards  were  sawed  and  ready  to  deliver 
at  his  saw  mill.  He  showed  also  that  he  remained  there 
from  early  morning  imtil  sundown  of  that  day,  ready 
and  willing  to  deliver  the  boards  to  Barney,  but  that 
Barney  did  not  appear.  Thereafter,  Bliss  refused  to 
deliver,  and  Barney  brought  this  action  for  damages. 

Bliss  contended  that  his  readiness  and  willingness, 
on  the  day  and  at  the  place,  to  deliver  the  boards,  was 
a  good  tender,  and  that  thereafter  his  obligation  on 
the  contract  was  at  an  end. 

Decision :  A  tender  is  an  offer  on  the  part  of  a  per- 
son, wjio  is  under  an  obligation  to  perform  that  obliga- 
tion. Where  the  obligation,  as  in  this  case,  is  the  de- 
livery of  personal  property,  a  good  and  sufficient  ten- 
der discharges  the  obligation  under  the  contract.  K 
there  is  a  good  tender,  the  property  becomes  the  prop- 
erty of  the  other  contracting  party,  although  it  con- 
tinues to  remain  in  the  possession  of  the  seller.  The 
Court,  however,  was  of  the  opinion  that  in  this  case 
there  was  not  a  sufficient  tender,  although  the  seller 
was  ready  and  willing  during  the  whole  of  the  day 
agreed  upon  and  at  the  place  stipulated,  to  deliver  the 
property.  He  should  have  taken  some  actual  steps 
manifesting  his  intention  to  deliver.  He  should  have 
taken  reasonable  steps  to  notify  Barney  that  the  prop- 


292  CONTRACTS 

erty  was  ready  for  delivery.  Failing  in  this  the  ten- 
der was  not  good. 

Mr.  Chief  Justice  Skinner  said:  *'It  may  be  laid 
down  as  a  general  rule,  that  when  contracts  are  made 
for  the  delivery  of  goods,  or  any  article  other  than 
money,  a  tender  of  the  thing  contracted  for  according 
to  the  contract,  though  refused  to  be  accepted  by  the 
promisee,  absolutely  discharges  the  contract.'' 

Judgment  was  given  for  Barney  because  a  sufficient 
tender  was  not  shown. 

RULING  LAW 
Story  Case  Answer 

We  have  seen  that  when  the  obligation  of  a  contract 
is  to  pay  money,  payment  in  legal  tender,  or  in  the 
manner  authorized,  is  a  discharge  of  the  obligation. 
But  a  tender  of  money  due,  although  refused,  does  not 
constitute  a  discharge  of  the  contract.  Its  only  effect 
is  to  stop  the  running  of  interest,  and,  in  case  suit  is 
brought  for  the  money  due,  the  party  refusing  the  ten- 
der must  bear  the  cost  of  suing  thereafter.  But  when 
the  obligation  of  a  contract  is  not  for  the  payment  of 
money,  the  obligation  of  a  contract  is  discharged  by  a 
good  tender.  A  tender  consists  in  offering  to  perform 
at  the  stipulated  time  and  place  of  performance.  The 
law  requires  that  the  person  making  the  tender  shall 
take  actual  steps  to  make  the  tender.  Mere  passivity 
at  the  time  and  place  of  performance  is  not  a  good  ten- 
der, although  the  person  is  ready  and  willing  to  per- 
form. In  the  Story  Case,  Mr.  Millikan's  acts  consti- 
tuted a  good  and  sufficient  tender.  Thereafter  his 
obligation  on  the  contract  was  at  an  end.  The  boat 
became  the  property  of  Mr.  Van  Revel,  and  the  loss 
of  the  boat  was  bis. 


CONTEACTS  293 

C.     Substantial  Performance 
STOEY  CASE 

Mr.  J.  H.  Alverson  prepared  the  specifications 
for  building  a  barn,  and  submitted  them  to 
George  McDonald,  a  carpenter.  After  looking  them 
over,  the  latter  agreed  to  build  the  barn  for  the  sum 
of  $350.  He  at  once  set  to  work  and  soon  finished 
the  building.  When  Mr.  Alverson  inspected  the  bam, 
he  found  that  there  were  defects  in  the  building.  It 
was  found  that  the  doors  all  opened  inward,  when  the 
specifications  directed  that  they  should  open  outward. 
However,  it  appeared  that  this  defect  could  easily  be 
remedied  for  a  very  small  sum.  After  the  first  rain, 
it  was  seen  that  there  were  two  leaks  in  the  roof.  These 
could  also  be  remedied  at  slight  cost.  Because  of  these 
minor  defects,  Mr.  Alverson  refused  to  pay  McDonald 
anything  for  his  work.  He  claimed  that  strict  com- 
pliance mth  all  the  specifications  was  a  condition  pre- 
cedent to  McDonald's  right  to  recover.  The  latter 
brought  suit,  and  claimed  that  he  was  entitled  to  the 
contract  price,  less  any  damage  which  the  defects 
caused.    What  should  be  the  decision  of  the  Court? 

BXTUNG  COUBT  CASE 

Woodward  vs.  Fuller,  Volume  80  New  York  Reports, 
Page  312. 

Woodward,  who  was  a  carpenter,  contracted  with 
Mrs.  Fuller  to  alter  and  repair  a  house,  which  she 
owTied  and  occupied.  He  finished  the  work,  but  several 
minor  defects  appeared  therein.  It  was  shown  that 
the  roof  and  chimneys  were  not  well  supported;  that 
certain  folding  doors  were  not  well  hung;  and  that 
one  door  did  not  fit  its  casings,  so  that  the  door  would 


294  CONTEACTS 

not  close  easily.  With  the  exception  of  these  defects, 
the  work  was  performed  in  a  workmanlike  manner  and 
fully  in  accord  with  the  terms  of  their  contract.  These 
were  not  substantial  defects  and  could  easily  be  rem- 
edied at  small  expense  and  little  inconvenience  to  Mrs. 
Fuller.  Notwithstanding  this,  because  of  these  defects, 
Mrs.  Fuller  refused  to  pay  Woodward  for  any  of  his 
work.  He,  thereupon,  brought  suit  upon  the  contract 
for  the  compensation  agreed  upon,  less  the  amount  of 
damages  caused  by  these  defects. 

Mrs.  Fuller  contended  that  strict  performance  was  a 
condition  to  his  right  to  recover  upon  the  contract; 
and  that  his  substantial  performance  was,  therefore, 
immaterial  so  far  as  his  right  to  recover  upon  the  con- 
tract was  concerned. 

Decision :  A  contract,  of  course,  is  discharged  when 
it  can  be  shown  that  it  has  been  performed  strictly  in 
accordance  with  the  terms  of  the  contract.  Such  per- 
formance entitles  the  one  performing  to  the  compensa- 
tion agreed  upon  in  the  contract.  Furthermore,  if  he 
has  substantially  performed  his  part  of  the  contract, 
he  is  entitled  to  recover  upon  the  contract  the  compen- 
sation agreed  upon,  less  the  damages  caused  by  the  in- 
substantial defects  of  his  performance.  In  this  case 
Woodward  did  substantially  perform  the  contract,  and 
is  entitled  to  recover  the  amount  of  compensation,  less 
the  damages  caused  by  the  defects. 

By  the  Court:  "As  to  the  principal  contract,  the 
plaintiff  (Woodward)  did  not  fully  perform  it.  As  the 
defendant  (Mrs.  Fuller)  was  not  bound  to  pay  the  con- 
tract price,  so  far  as  it  was  to  be  paid  in  money,  until 
the  contract  was  fully  performed  by  the  plaintiff,  full 
performance  by  him  was  a  condition  precedent  to  his 


CONTRACTS  295 

right  to  have  payment,  unless  she  has  accepted  the 
work,  or  waived  such  a  performance. 

There  is  no  finding  that  she  waived  such  a  perform- 
ance, or  that  she  accepted  the  work  as  complying  with 
the  contract.  If  the  plaintiff  is  to  be  held  strictly  to 
the  terms  of  his  contract,  he  must  fail  to  recover  there- 
on, and  that  he  should  be,  is  the  effect  of  the  earlier 
cases  in  this  state.  But  there  has  been  a  relaxation  of 
that  rule,  and  now,  on  such  a  contract,  there  may  be  a 
recovery  without  a  literal  or  exact  performance  of  it. 
It  is  now  the  rule  that,  where  a  builder  has  in  good  faith 
intended  to  comply  with  the  contract,  and  has  substan- 
tially complied  with  it,  although  there  may  be  slight  de- 
fects caused  by  inadvertence  or  unintentional  omis- 
sions, he  may  recover  the  contract  price,  less  the  dam- 
ages on  account  of  such  defects.  The  defects  must  not 
run  through  the  whole,  nor  be  so  essential  as  that  the 
object  of  the  parties  to  have  a  specified  amount  of 
work  done  in  a  particular  way  is  not  accomplished." 

Judgment  was  given  for  Woodward,  less  the  dam- 
ages, amounting  to  $100. 

SnUNG  LAW 
Story  Case  Answer 

As  a  general  ride  the  obligation  of  a  contract  must 
be  fully  performed  before  any  right  to  recover  on  the 
contract  arises  in  favor  of  the  person  upon  whom  this 
obligation  rests.  It  is  said  that  a  compliance  with  aU 
conditions  of  the  contract  is  a  condition  precedent  to 
the  right  to  recover  on  the  contract.  This,  in  general, 
seems  just.  For  a  person  is  entitled  to  have  just  what 
he  contracts  for.  Yet,  on  the  other  hand,  if  the  obliga- 
tion has  been  substantially  performed,  it  is  not  just 
that  he  should  be  permitted  to  repudiate  the  contract 


296  CONTEACTS 

because  of  some  slight  defect  which  may  easily  be 
remedied.  This  applies  especially  to  building  con- 
tracts. When  one  person  builds  on  the  land  of  another, 
immediately  the  materials  placed  upon  the  land  be- 
come the  property  of  the  owner  of  the  land.  If  he 
were  permitted  to  repudiate  the  contract  because  of 
such  slight  defects,  it  would  be  unjust  to  the  other  per- 
son. Therefore,  it  is  generally  held  in  reference  to 
building  contract  that  substantial  performance  will  en- 
title the  performer  to  his  right  to  recover  the  contract 
price,  less  the  amount  of  damages  the  defects  have 
caused.  However:  The  defects  must  be  slight;  they 
must  not  run  through  the  whole  contract ;  they  must  be 
easily  remedied.  In  the  Story  Case,  the  performance 
by  McDonald  was  substantial.  Consequently  he  should 
be  entitled  to  recover  on  the  contract  for  the  compen- 
sation agreed  upon,  less  any  damages  caused  by  the 
defects  in  construction. 


3.     By  Breach 

A.     Renunciation  Before  Time  for  Performance 

STORY  CASE 

Mr.  Julius  L.  Rink  was  the  owner  of  a  department 
store  in  Bloomington,  Illinois.  He  had  always  man- 
aged the  business  himself.  But  in  January,  1915,  he 
decided  that  he  would  retire  from  active  management 
of  the  business  and  procure  a  good  man  to  look  after 
it  for  him.  He  conferred  with  M.  W.  Daly,  who  was 
then  manager  of  a  department  store  in  the  same  city, 
with  a  view  of  procuring  the  services  of  the  latter.  At 
this  time,  Daly  was  receiving  a  salary  of  $1,500  per 
year.    Mr.  Rink  offered  him  $1,800,  if  he  would  ac- 


CONTRACTS  297 

cept  the  management  of  his  store.  After  some  further 
negotiations,  Mr.  Daly  agreed  to  accept.  A  written 
contract  was  drawn  up,  by  which  Mr.  Daly  agreed  to 
act  as  manager  of  Mr.  Rink's  department  store  for  a 
period  of  three  years,  at  a  salary  of  $1,800  per  year, 
beginning  on  the  1st  day  of  June,  1915.  In  February, 
1915,  Mr.  Rink  received  an  attractive  offer  for  his  busi- 
ness, and  sold  it  at  once.  Three  days  later,  Daly  started 
^uit  against  Rink  for  damages  for  breach  of  contract 
of  employment.  Rink  contended  that  the  suit  was  pre- 
maturely brought.  He  insisted  that  this  suit  could  not 
be  brought  until  the  end  of  the  three  years,  when  the 
period  of  employment  would  have  ended;  or  at  least 
not  until  June,  when  the  period  of  service  would  begin. 
What  should  be  the  decision  of  the  court? 

BUUNG  COnST  CASE 

Eochster  vs.  De  La  Tour,  Volume  2  Ellis  S  Black- 
hum  Reports,  Page  678. 

On  the  trial  of  this  case,  it  appeared  that  Hochster 
was  a  courier,  who,  in  April,  was  engaged  by  De  La 
Tour  to  accompany  him  upon  a  European  tour.  By  the 
terms  of  the  agreement,  the  tour  was  to  begin  on  June 
1  of  that  year  and  continue  for  three  months.  De  La 
Tour  agreed  to  pay  Hochster  ten  pounds  a  month  for 
his  services  in  this  capacity.  On  the  11th  day  of  May, 
De  La  Tour  wrote  Hochster  that  he  had  changed  his 
mind  and  declined  his  services.  He  refused  to  pay 
Hochster  anything  by  way  of  compensation  for  the 
preparation  he  had  made.  This  action  was  begun  to 
recover  damages  for  the  breach  of  the  contract.  It  was 
begun  on  the  22nd  day  of  May,  before  the  time  set 
for  performance  had  come. 


298  CONTEACTS 

De  La  Tour  claimed  that  the  action  was  prematurely 
brought.  He  contended  that  the  action  should  not  have 
been  brought  until  after  the  full  time  for  performance 
had  elapsed. 

Decision :  Where  a  person  repudiates  a  contract  be- 
fore the  time  set  for  performance,  the  other  party  may 
do  one  of  two  things.  He  may  refuse  to  recognize  the 
breach,  and  wait  until  time  for  performance  has  come 
and  passed,  and  then  sue  for  damages  resulting  there- 
from. Or  he  may  accept  the  breach  immediately  and 
bring  suit  for  the  damages  which  he  will  probably 
suffer  therefrom.  The  person  responsible  for  the 
breach  has  no  right  to  complain  if  the  suit  is  thus 
brought. 

Lord  Campbell,  Chief  Justice,  said :  ''The  man  who 
wrongfully  renounces  a  contract,  into  which  he  has  de- 
liberately entered,  cannot  justly  complain  if  he  is  im- 
mediately sued  for  a  compensation  in  damages  by  the 
man  whom  he  had  injured ;  and  it  seems  reasonable  to 
allow  an  option  to  the  injured  party,  either  to  sue  im- 
mediately, or  to  wait  till  the  time  when  the  act  was 
to  be  done,  still  holding  it  prospectively  binding;  for 
the  exercise  of  this  option  may  be  advantageous  to  the 
innocent  party  and  be  allowed  to  be  prejudicial  to  the 
wrongdoer. ' ' 

The  Court  gave  judgment  for  Hochster. 

RULING  LAW 
Story  Case  Answer 

"When  a  contract  is  entered  into,  the  obligation\of 
which  contemplates  some  future  acts,  the  per- 
son upon  whom  this  obligation  rests  must  usually 
be  prepared  at  the  time,  when  the  acts  are  to  be  done. 


CONTRACTS  299 

to  do  them.  His  readiness  and  willingness  at  this  time 
is  generally  a  condition  precedent  to  his  right  to  re- 
cover anything  under  the  contract.  If  in  the  mean- 
time, the  other  party  announces  that  he  repudiates  the 
contract,  the  courts  permit  the  performer  one  of  sev- 
eral remedies.  He  is  under  no  duty  to  accept  the  re- 
pudiation and  may  present  himself  at  the  time  of  per- 
formance. If,  at  that  time,  he  is  not  permitted  to  pro- 
ceed, he  may  then  bring  suit  for  the  damages  he  may 
suffer.  Or  he  may  still  treat  the  contract  in  existence, 
wait  until  the  period  of  employment  ends  and  sue 
on  the  contract  for  what  he  has  suffered.  But  he  is 
under  no  obligation  to  do  either.  He  may  accept  the 
repudiation  at  once,  and  immediately  bring  suit  for  the 
damages  which  he  will  suffer,  even  though  the  time 
has  not  arrived  when  he  is  to  begin  performing  under 
the  contract.  So,  in  the  Story  Case,  the  suit  was  not 
prematurely  brought.  Judgment  should,  therefore,  be 
given  for  Daly. 


B.    Renunciation  in  the  Course  of  Performance 
STOBY  CASE 

Mr.  J.  W.  Stevens,  owner  and  proprietor  of  a  mov- 
ing picture  theater,  engaged  Miss  Myrtle  McElroy  to 
play  a  pipe  organ  in  his  theater.  He  engaged  her  for 
one  year,  and  agreed  to  pay  her  the  weekly  sum  of 
$30.  After  about  three  months,  he  notified  her  that 
he  would  not  need  her  services  any  more;  that  the 
patronage  at  his  theater  did  not  justify  him  in  paying 
so  large  a  sum  for  some  one  to  play  the  organ.  She 
thereupon  began  suit  for  damages.  She  claimed  dam- 
ages, not  only  for  the  time  intervening  her  dismissal 
and  the  bringing  of  the  action,  but  for  the  remainder 


300  CONTRACTS 

of  the  year.  Stevens  contended  that  she  eonld  only  re- 
cover for  the  damages  to  the  time  when  the  suit  was 
brought,  and  that  for  subsequent  damages  she  would 
have  to  wait  until  such  damages  had  accrued.  May  she 
recover  full  damages  in  this  action? 

RULING  COURT  CASE 

Isaac  Parker  vs.  Electa  Russell,  Volume  133 ;  Mas- 
sachusetts Reports,  Page  74. 

Isaac  Parker  conveyed  real  estate  to  Electa  Russell. 
In  consideration  of  this  conveyance,  Russell  promised 
and  agreed  to  support  and  maintain  Isaac  Parker,  fur- 
nishing him  with  all  things  necessary  and  convenient  in 
sickness  and  in  health,  during  the  natural  life  of 
Parker.  This  agreement  was  entered  into  in  the  year 
1873.  Russell  did  support  Parker  from  that  time  until 
some  time  in  1878,  when  her  house  burned.  From  that 
time  until  the  bringing  of  this  action,  she  had  failed 
and  refused  to  support  Parker.  He  brought  this  action 
asking  for  damages  for  breach  of  the  entire  contract. 

She  contended  that  an  action  could  not  be  maintained 
for  entire  damages.  She  insisted  that  he  could  recover 
damages  merely  for  the  past  unperformed  part  of  the 
contract,  but  that,  as  to  the  future  unperformed  part, 
an  action  would  have  to  be  brought,  thereafter,  for 
damages. 

Decision:  Where  one  commits  a  breach  of  a  con- 
tract during  the  performance  of  the  contract,  the  in- 
jured party  may  bring  an  action  at  once  to  recover  en- 
tire damages.  The  contract  is  at  an  end,  and  the 
injured  party  is  under  no  obligation  to  wait  until  the 
time  for  full  performance  has  elapsed  before  suing  for 
damages. 


CONTRACTS  301 

Mr.  Jnstice  Field  said:  **In  an  action  for  a  breach 
of  a  contract  to  support  the  plaintiff  during  his  life, 
if  the  contract  is  regarded  as  still  subsisting,  the  dam- 
ages are  assessed  to  the  date  of  the  suit,  and  not 
to  the  time  when  the  verdict  is  rendered.  But  if  the 
breach  has  been  such  that  the  plaintiff  has  the  right 
to  treat  the  contract  as  absolutely  and  finally  broken 
by  the  defendant  and  he  elects  so  to  treat  it,  the  dam- 
ages are  assessed  as  of  a  total  breach  of  an  entire 
contract." 

Judgment  was  given  for  Parker  for  entire  damages. 

SnUNG  LAW 
Story  Case  Answer 

When  one  of  the  parties  to  a  contract,  during  its  per- 
formance, refuses  to  permit  the  other  to  continue  with 
the  contract,  the  injured  person  may  do  one  of  two 
things.  He  may  wait  until  the  end  of  the  period  of  his 
employment  and  sue  for  all  damages,  accrued  to  him, 
or  he  may  bring  suit  at  once  and  recover  all  past  dam- 
ages and  damages  likely  to  accrue  in  the  future.  In  the 
Story  Case,  therefore,  Miss  McElroy  was  within  her 
rights  in  suing  at  once  and  was  entitled  to  recover, 
not  only  for  past  damages,  but  for  prospective  dam- 
ages as  well. 


4.     By  Impossibility 
STORT  CASE 

The  Kewanee  Brewery  Company,  in  January  of  1914, 
contracted  to  furnish  W.  E.  Murphy,  a  local  saloon 
proprietor,  all  the  beer  that  he  should  need  in  his  busi- 
ness for  the  year  1914,  at  a  certain  price.    In  June 


302  CONTEACTS 

1914,  in  accordance  with  a  law  passed  by  the  state 
legislature,  the  people  of  Kewanee  voted  to  make  the 
sale  of  any  intoxicating  drinks  in  Kewanee  illegal.  Ac- 
cordingly, the  brewery  company  refused  to  furnish 
any  more  beer  to  Murphy,  who  intended  to  resell  it 
secretly  iq  violation  of  the  law.  He,  thereupon,  brought 
an  action  against  the  company  for  damages.  The 
company  contended  that  the  contract  was  discharged 
because  performance  had  been  made  impossible  by  law. 
What  should  be  the  decision  of  the  court  ? 

RULING  COTJET  CASE 

Spalding  vs.  Rosa,  Volume  71  New  York  Reports, 
Page  40. 

Spalding  was  the  owner  and  manager  of  the  Olympia 
Theater  in  the  city  of  St.  Louis.  He  made  a  con- 
tract with  Bosa,  who  was  a  booldng  agency  in  New 
York,  by  which  the  latter  agreed  to  furnish  the  Wachtel 
Opera  Company  to  give  four  performances  per  week 
at  the  St.  Louis  theater,  for  two  weeks.  Wachtel  was 
the  leading  singer  of  the  company.  In  fact,  it  appeared 
that  he  was  the  only  one  worth  while  as  a  singer.  Ln- 
mediately  preceding  the  opening  performance,  Wachtel 
became  ill,  and  the  engagement  for  the  whole  series  of 
performances  had  to  be  cancelled,  because  his  place  in 
the  company  could  not  be  filled  by  any  substitute.  This 
action  was  brought  by  Spalding  for  damages. 

It  was  insisted  by  Eosa  that  the  performance  of  the 
contract  was  excused  because  of  the  sickness  of  Wach- 
tel, making  performance  impossible. 

Decision:  The  performance  of  a  contract  of  per- 
sonal services  will  be  excused  when  the  person  who  was 
to  render  the  services  dies,  or  becomes  sick  in  the 


CONTRACTS  303 

meantime  so  that  he  camiot  perform.  In  this  case, 
since  Wachtel  was  the  main  attraction  of  the  com- 
pany, and  since  the  performance  could  not  be  given 
without  him,  his  intervening  sickness  excuses  the  per- 
formance of  the  contract. 

Mr.  Justice  Allen,  who  delivered  the  opinion  of  the 
Court,  said  in  part:  '*The  sickness  and  inability  of 
Wachtel  occurring  without  the  fault  of  the  defendants 
constitutes  a  valid  excuse  for  the  non-performance  of 
the  contract.  Contracts  of  this  character,  for  the  per- 
sonal services,  whether  of  the  contracting  party  or  ot 
a  third  person,  requiring  skill  and  which  can  only  be 
performed  by  the  particular  individual  named,  are  not 
in  their  nature  absolute  obligations  under  all  circum- 
stances. Both  parties  must  be  supposed  to  contem- 
plate the  continuance  of  the  ability  of  the  person  whose 
skilled  services  are  the  subject  of  the  contract,  as  one 
of  the  conditions  of  the  contract.  Contracts  for  per- 
sonal services  are  subject  to  this  implied  condition, 
that  the  person  shall  be  able  at  the  time  appointed  to 
perform'  them ;  and  if  he  dies,  or  without  fault  on  the 
part  of  the  convenantor,  becomes  disabled,  the  obliga- 
tion to  perform  is  extinguished.'* 

Judgment  was  given  for  Eosa. 

RUIiINO  LAW 

Story  Case  Answer 

If  a  contract  is  made  in  reference  to  some  subject 
matter,  the  continued  existence  of  which  must  have 
been  a  condition  of  the  parties'  agreement,  it  is  held 
that  the  destruction  of  the  matter  will  discharge  the 
contract,  if  it  is  destroyed  without  the  fault  of  the  one 
under  obligation  to  perform.    Also,  when  one  contracts 


304  CONTRACTS 

to  perform  some  personal  services  which  no  one  but 
himself  can  perform,  his  sickness  or  physical  inability, 
without  any  fault  on  his  part,  discharges  the  contract. 
That  was  the  situation  in  the  Court  Case  of  Spalding 
vs.  Rosa.  Impossibility  arising  by  operation  of  law 
will  also  discharge  a  contract.  Thus,  iq  the  Story 
Case,  the  obligation  of  the  brewery  company  to  con- 
tinue to  furnish  beer  during  the  remainder  of  that  year 
was  discharged,  because  of  impossibility  created  by 
law. 


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